From Its Inception Through the Year of 2017,First Mart,Inc

question 79

Multiple Choice

From its inception through the year of 2017,First Mart,Inc.was profitable and made strong dividend payments each year.In the year 2018,First Mart had major losses and paid no dividends.In 2019,the company started making large profits again,and they were able to pay dividends to all shareholders-both common and preferred.There are 2000 shares of cumulative,10% preferred stock outstanding.The preferred stock has a par value of $100.What is the total amount of dividends that should be paid to the preferred stockholders in December,2019?

• A) $60,000
• B) $90
• C) $20,000
• D) $40,000

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Definitions:

Nonprofit Corporation

An organization formed for purposes other than generating a profit, where none of its income is distributed to its directors or officers.

Ultra Vires

Acts or decisions made by an entity that are beyond the powers conferred by its constitution, charter, or laws.

Lend Money

The act of giving money to another party with the expectation that it will be paid back, usually with interest, over time.

Good Faith

Acting with honesty and sincerity without any intention to defraud or seek unfair advantage.