Parker Company has 24,000 shares of $1 par common stock issued and outstanding.

Question

Parker Company has 24,000 shares of $1 par common stock issued and outstanding. The company also has 2,000 shares of $100 par 5% cumulative preferred stock outstanding. The company did not pay the preferred dividends in 2014 or 2015. What amount of dividends must the company pay the preferred shareholders in 2016 if they wish to pay the common stockholders a dividend?

Parker Company has 24,000 shares of $1 par common stock issued and outstanding. The company also has 2,000 shares of $100 par 5% cumulative preferred stock outstanding. The company did not pay the preferred dividends in 2014 or 2015. What amount of dividends must the company pay the preferred shareholders in 2016 if they wish to pay the common stockholders a dividend? Amount of dividend

Explanation / Answer

Preferred dividends/year=(2000*100)*5%=$10,000

Hence total Preferred dividends to be paid in 2016=$10000*3 years

=$30,000

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