McBean Company has outstanding 10 million shares of $2 par value common stock an
ID: 2474085 • Letter: M
Question
McBean Company has outstanding 10 million shares of $2 par value common stock and 1 million shares of $4 par value preferred stock. The preferred stock has a 7% dividend rate The company declares $600,000 in total dividends for the year Preference dividends in nears are $30,000. Compute the amount of dividends to be distributed to preferred shareholders (Enter your answer in dollars and not in millions.) Compute the amount of dividends to be distributed to common shareholders (Enter your answer in dollars and not in millions.)Explanation / Answer
a)Preferred dividend amount = 1,000,000 *4 * .07 = $ 280,000
b) common stock dividend = 600,000 - 280,000 = 320,000
**Preferred dividend in arrear is not relevant as the preference shares are not cummulative .