The Chester Company has issued 10% non-participating cumulative preferred stock

Question

The Chester Company has issued 10% non-participating cumulative preferred stock with the total par value of $400,000 in common stock with a total per value of $800,000 no dividends are in arrears how much cash will be paid to the preferred stockholders in the common stockholders respectively if the cash dividends of $180,000 are distributed The Chester Company has issued 10% non-participating cumulative preferred stock with the total par value of $400,000 in common stock with a total per value of $800,000 no dividends are in arrears how much cash will be paid to the preferred stockholders in the common stockholders respectively if the cash dividends of $180,000 are distributed

Explanation / Answer

preferred stockholders dividends=($400,000*10%)=$40,000

Balance left over is paid for to common stockholders;

which is equal to(180000-40000)=$140,000.

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