Denson, Inc. has 10,000 shares of 7%, $100 par value, non-cumulative preferred stock and 40,000 shares of $1 par value common stock outstanding at December 31, 2014. There were no dividends declared in 2013. The board of directors declares and pays a $120,000 dividend in 2014. What is the amount of dividends received by the common stockholders in 2014? a. $0. b. $70,000. c. $120,000. d. $50,000.

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2 June, 12:17

Denson, Inc. has 10,000 shares of 7%, $100 par value, non-cumulative preferred stock and 40,000 shares of $1 par value common stock outstanding at December 31, 2014. There were no dividends declared in 2013. The board of directors declares and pays a $120,000 dividend in 2014. What is the amount of dividends received by the common stockholders in 2014? a. $0. b. $70,000. c. $120,000. d. $50,000.

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Cara Reeves · Answer 1

d. $50,000.

Explanation:

the preferred stock are non-cumulative so their unpaid dividends of previous year are not accumulated and carry over the following years.

10,000 shares x $100 x 7% = $70,000 dividends to preferred shares

120,000declared dividends

- 70,000 preferred dividends

50,000 available for common stock