Question

Brewer Inc. has 5,000 shares of 6%, $50 par value, cumulative preferred stock and 100,000 shares of $1 par value common stock outstanding at December 31, 2017, and December 31, 2016. The board of directors did NOT declare dividends in 2016. What are the dividends received by the preferred stockholders in 2017?

Answer 1

Answer:

Total dividend = 30,000

Explanation:

Given:

Total number of stock = 5,000

Dividend rate = 6% = 0.06

Per value = $50

Computation of dividend per year:

Dividend per year = Total number of stock × Per value × Dividend rate

Dividend per year = 5,000 × $50 × 0.06

Dividend per year = 15,000

For cumulative preferred stock:

Total dividend = 2016 Dividend + 2017 Dividend

Total dividend = 15,000 + 15,000

Total dividend = 30,000