Dividend Allocation Background:The following is the owners\' equity section of S

Question

Dividend Allocation Background:The following is the owners' equity section of Simpson Co. at 1//2012: Common Stock ($1 par value, 20,000,000 shares authorized, 4,000,000 shares issued and outstanding)$4,000,000 7% Preferred stock ($30 par value, 1,000,000 shares authorized, 400,000 shares issued and outstanding) 12,000,000 Additional paid-in capital on common stock Retained earnings Total Stockholders' Equity 17,000,000 35,000,000 $68,000,000 Simpson declares dividends on common and preferred stock annually. On 12/23/12, Simpson declares the annual dividend of $1,500,000 to shareholders of record on 12/31/2010, to be paid 1/5/13. Determine the total amount of the dividend that is allocated to common and preferred shareholders. You must show your work Required: Common Preferred

Explanation / Answer

Dividend distribution :

Preferred stockholders = 12000000*7% = 840000

Common stockholders = (1500000-840000) = 660000

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