Towson Corp., had 6,000 shares of $100 par, 4% cumulative preferred stock as of January 1, 2018. No additional shares of preferred stock were issued during fiscal years 2018 & 2019. Dividends were paid to common shareholders in 2017 but no shareholders were paid dividends in 2018. A total of $85,000 of dividends was paid in 2019. Use this information to determine the total dollar amount of dividends that was paid to common shareholders during fiscal year 2019.

Question

Business

Javier

23 September, 07:35

Towson Corp., had 6,000 shares of $100 par, 4% cumulative preferred stock as of January 1, 2018. No additional shares of preferred stock were issued during fiscal years 2018 & 2019. Dividends were paid to common shareholders in 2017 but no shareholders were paid dividends in 2018. A total of $85,000 of dividends was paid in 2019. Use this information to determine the total dollar amount of dividends that was paid to common shareholders during fiscal year 2019.

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Johnathan Carlson · Answer 1

Common Dividend paid in 2019 = $37,000

Explanation:

Given:

Number of shares = 6,000

Rate = 4% = 0.04

Share price = $100

Computation of per year Dividend

Dividend = Number of shares * Share price * Rate

Dividend = 6,000 * $100 * 0.04 = $24,000 per year

Preferred dividend for 2 years = $24,000 * 2 = $48,000

Computation of Dividend paid in 2019:

Total Dividend paid = $85,000

Preferred dividend for 2 years = $24,000 * 2 = $48,000

Common Dividend paid in 2019 = $85,000 - $48,000

Common Dividend paid in 2019 = $37,000