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

question 87

Multiple Choice

A corporation has 10,000 shares of 10%, $50 par noncumulative preferred stock outstanding and 20,000 shares of no-par common stock outstanding. At the end of the current year, the corporation declares a dividend of $120,000.
How is the dividend allocated between preferred and common stockholders?

• A) The dividend is allocated $5,000 to preferred shareholders and $115,000 to common shareholders.
• B) The dividend is allocated $50,000 to preferred shareholders and $70,000 to common shareholders.
• C) The dividend is allocated $60,000 to preferred shareholders and $60,000 to common shareholders.
• D) The dividend is allocated $12,000 to preferred shareholders and $108,000 to common shareholders.

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