Outstanding stock of the Colt Corporation included 20,000 shares of $5 par common stockand 5,000 shares of 5%, $10 par noncumulative preferred stock. In 2009, Colt declaredand paid dividends of $2,000. In 2010, Colt declared and paid dividends of $6,000. Howmuch of the 2010 dividend was distributed to preferred shareholders? a. $3,000b. $3,500c. $2,500d. None of the above

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Pinkie

16 April, 06:44

Outstanding stock of the Colt Corporation included 20,000 shares of $5 par common stockand 5,000 shares of 5%, $10 par noncumulative preferred stock. In 2009, Colt declaredand paid dividends of $2,000. In 2010, Colt declared and paid dividends of $6,000. Howmuch of the 2010 dividend was distributed to preferred shareholders? a. $3,000b. $3,500c. $2,500d. None of the above

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Kiara Blankenship · Answer 1

Option c.

$2,500 of the 2010 dividend was distributed to the preferred shareholder.

Explanation:

Dividend Preferred Shareholders = (Par Value Preferred Stock * Number of Share Issued * Percentage of Preferences Shares)

= $10 * 5.000 * 5%

= $2.500