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ultimate sportswear has $140,000 of 6% noncumulative, nonparticipating, preferred stock outstanding. ultimate sportswear also has $540,000 of common stock outstanding. in the company's first year of operation, no dividends were paid. during the second year, the company paid cash dividends of $34,000. this dividend should be distributed as follows:

Respuesta :

The company paid cash dividends of $34,000. this dividend should be distributed as $8000 is the preferred dividend.

Dividend on common stock = $22,000

The dividend computation is displayed below:

- Preferred dividend: $100,000 x 0.08 = $8,000 Total shares x Total Shares of Noncumulative, Nonparticipating, Preferred Stock Outstanding

Dividend on common stock equals Cash Dividend - Preferred Dividend, or $30k - $8k - $2k.

Consequently, the common stock dividend is $22,000 and the preferred dividend is $8,000.The total cash dividends are stated as being equal to $40,00.

Due to the preferred stock being granted, the preferred stock receives the cash dividends first.

The issued preferred shares, worth $200,000, was priced at 8%.

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