McBean Company has outstanding 17 million shares of $3 par value common stock an
ID: 2498765 • Letter: M
Question
McBean Company has outstanding 17 million shares of $3 par value common stock and 2 million shares of $4 par value cumulative preferred stock. The cumulative preferred stock has a 6% dividend rate. The company declares $750,000 in total dividends for the year. Dividends in arrears are $31,000.
Compute the amount of dividends to be distributed to preferred shareholders. (Enter your answers in dollars. Omit the "$" sign in your response.)
Compute the amount of dividends to be distributed to common shareholders. (Enter your answers in dollars. Omit the "$" sign in your response.)
a.Compute the amount of dividends to be distributed to preferred shareholders. (Enter your answers in dollars. Omit the "$" sign in your response.)
b.Compute the amount of dividends to be distributed to common shareholders. (Enter your answers in dollars. Omit the "$" sign in your response.)
Explanation / Answer
a)
Dividend on Pref shares 2000000*4*6%= 480,000
Dividend in arrears 31,000
Total Dividend paid 750,000
Prefered Shareholders will get = 480,000+31,000 = 511,000
b) Rem dividend = 750,000-511,000 = 239,000
Dividend distributed to coomon shareholders = 239,000