Dividends on Cumulative Preferred Shares of $3,000 Are in Arrears

question 176

Multiple Choice

Dividends on cumulative preferred shares of $3,000 are in arrears for 2015.During 2016,the total dividends declared amount to $10,000.There are 5,000 shares of $1 cumulative preferred shares outstanding and 10,000 common shares outstanding.The total amount of dividends payable to each class of shares in 2016 amounts to:

• A) $3,000 to preferred, $7,000 to common
• B) $8,000 to preferred, $2,000 to common
• C) $5,000 to preferred, $5,000 to common
• D) $10,000 to preferred, $0 to common

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Definitions:

Financing Statement

A document filed to give public notice that a lender has a security interest in a borrower's personal property.

Effective

In force or operational; commonly refers to the date on which a law, regulation, or agreement is applied or becomes operational.

Secured

Pertaining to a loan or obligation that is backed by collateral to reduce the risk of lending.

Security Interest

A legal claim or liens on property as collateral for the payment of a debt or performance of some other obligation.