Atlantis Corporation has 12,000 shares of 14%, $78 par noncumulative preferred stock outstanding and 29,000 shares of no-par common stock outstanding. At the end of the current year, the corporation declares a dividend of $188,000. How is the dividend allocated between preferred and common stockholders?

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Business

Moran

4 October, 17:02

Atlantis Corporation has 12,000 shares of 14%, $78 par noncumulative preferred stock outstanding and 29,000 shares of no-par common stock outstanding. At the end of the current year, the corporation declares a dividend of $188,000. How is the dividend allocated between preferred and common stockholders?

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Kellie · Answer 1

The preferred shareholders will be allocated a dividend of $131040 and the common shareholders will be allocated a dividend of $56960.

Explanation:

Total dividend declared = $188000

the allocation of dividends:

Preferred shareholders = (12000*14%) * $ 78

= $ 131040

Common shareholders = Total dividends - preferred shareholders dividend

= $ 188000 - $ 131040

= $ 56960

Therefore, the common shareholders will be allocated dividends of $ 56960 and the preferred shareholders will be allocated dividends of $ 131040.