The shareholders' equity of Green Corporation includes $386,000 of $1 par common stock and $570,000 par of 7% cumulative preferred stock. The board of directors of Green declared cash dividends of $67,000 in 2018 after paying $37,000 cash dividends in each of 2017 and 2016. What is the amount of dividends common shareholders will receive in 2018?

The amount of dividends common shareholders will receive in 2018 is $21,300

Explanation:

The computation of amount of dividend of common shareholders is shown below:

Previous year stock dividend (2017 & 2016) = ($570,000 * 7%) - 37000 * 2

= $5800

Current year stock dividend 2017 = $570,000 * 7% = $39900

Current year cash dividend 2018 = $67,000

Now, subtract the 20178 stock dividend and previous year stock dividend from Current year cash dividend 2018 which equals to $21,300

= $67,000 - $39900 - $5800

= $21,300

Thus, the amount of dividends common shareholders will receive in 2018 is $21,300