Question

Cumulative Preferred Dividends Capital stock of Barr Company includes: Common stock, $5 par, 650,000 shares outstanding $3,250,000 Preferred stock, 15% cumulative, $60 par, 10,000 shares outstanding 600,000 As of December 31, 2018, 2 years' dividends are in arrears on the preferred stock. During 2019, Barr plans to pay dividends that total $360,000. Required: 1. Determine the amount of dividends that will be paid to Barr's common and preferred stockholders in 2019. Total dividend to preferred stockholders $fill in the blank 1 Total dividend to common stockholders $fill in the blank 2 2. If Barr paid $280,000 of dividends, determine how much each group of stockholders would receive. Total dividend to preferred stockholders $fill in the blank 3 Total dividend to common stockholders $fill in the blank 4

Answer 1

Answer:

Barr Company

December 31, 2019:

Cumulative preferred dividends = $270,000

Common stock dividends =                90,000

Total dividends paid =                    $360,000

December 31, 2019:

Cumulative preferred dividends = $270,000

Common stock dividends =                10,000

Total dividends paid =                    $280,000

Explanation:

a) Data and Calculations:

Common stock, $5 par, 650,000 shares outstanding $3,250,000 Preferred stock, 15% cumulative, $60 par,

10,000 shares outstanding                                                600,000

December 31, 2018:

Cumulative preferred dividends = $180,000 ($600,000 * 15% * 2)

December 31, 2019:

Cumulative preferred dividends = $270,000 ($600,000 * 15% * 3)

Common stock dividends =                90,000 ($360,000 - $270,000)

Total dividends paid =                    $360,000

December 31, 2019:

Cumulative preferred dividends = $270,000

Common stock dividends =                10,000

Total dividends paid =                    $280,000