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28 August, 09:36

As of 2014, Fischer Corp. has $10 par, 4% preferred stock, 6,000 shares outstanding, and $1 par common stock with 38,000 shares outstanding. The preferred stock is cumulative and preferred stockholders last received a dividend in 2012.

If the company wants to distribute $3 per share to the common stockholders in 2014, what is the total amount of dividends that the company must pay in the current year?

A) $ 60,000

B) $118,800

C) $ 54,000

D) $114,000

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  1. 28 August, 10:55
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    B) $118,800

    Explanation:

    The computation of the total amount of dividends are shown below:

    = Preference dividend for year 2013 + Preference dividend for year 2014 + dividend for common stock

    = (6,000 shares * $10 * 4%) + (6,000 shares * $10 * 4%) + (38,000 shares * $3)

    = $2,400 + $2,400 + $114,000

    = $118,800

    Simply we added the preference dividend for 2013 and 2014 and then added the common stock dividend so that the accurate value can come.
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