A Corporation Has 15,000 Shares of 10%, $50 Par Cumulative

question 67

Multiple Choice

A corporation has 15,000 shares of 10%, $50 par cumulative preferred stock outstanding and 25,000 shares of no-par common stock outstanding. Dividends of $37,500 are in arrears. At the end of the current year, the corporation declares a dividend of $120,000. How is the dividend allocated between preferred and common shareholders?

• A)The dividend is allocated $7,500 to preferred shareholders and $112,500 to common shareholders.
• B)The dividend is allocated $112,500 to preferred shareholders and $7,500 to common shareholders.
• C)The dividend is allocated $120,000 to preferred shareholders and no dividend is paid to common shareholders.
• D)The dividend is allocated $75,000 to preferred shareholders and $45,000 to common shareholders.

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Definitions:

Strategic Fit

The degree to which an organization’s strategies align with its external environment and internal resources and capabilities.

Implied Demand Uncertainty

The unpredictability associated with customer demand, influenced by various factors that a business must consider in planning.

Intrafunctional Scope

The range of activities within a single business function or department, such as marketing or finance, focusing on its specific responsibilities and capabilities.

Conflicting Objectives

Refers to a situation where different goals or targets within a project, organization, or system are at odds with each other, making it challenging to achieve them simultaneously.