Assume the Following Capital Structure

question 5

Multiple Choice

Assume the following capital structure:
Preferred stock,6%,$50 par value,1,000 shares issued and outstanding with dividends in arrears for three prior years (2007 - 2009) .
Common stock,$100 par value,2,000 shares issued and outstanding.
Total dividends declared and paid in 2010 were $50,000.How much of the 2010 dividend will be paid to the preferred stockholders assuming the preferred stock is noncumulative?

• A)$12,000
• B)$3,000
• C)$47,000
• D)$38,000

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Definitions:

Janitorial Department

A division within an organization responsible for maintaining cleanliness, hygiene, and sanitation within the premises.

Cost Allocated

The amount of indirect costs assigned to cost objects based on certain criteria or cost drivers.

Assembly Department

A section within a manufacturing process where pieces are put together to form a component or a finished product.

Fixed Overhead Rate

A consistent charge that does not fluctuate with the level of output or activity in a given period, used to allocate fixed costs to units of output.