The Surf's Up Issues 1,000 Shares of 6%,$100 Par Value

question 39

Multiple Choice

The Surf's Up issues 1,000 shares of 6%,$100 par value preferred stock at the beginning of 2017.All remaining shares are common stock.The company was not able to pay dividends in 2017,but plans to pay dividends of $18,000 in 2018.Assuming the preferred stock is noncumulative,how much of the $18,000 dividend will be paid to preferred stockholders and how much will be paid to common stockholders in 2018?

• A)$6,000 to preferred stockholders and $12,000 to common stockholders.
• B)$18,000 to preferred stockholders and $0 to common stockholders.
• C)$12,000 to preferred stockholders and $6,000 to common stockholders.

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Definitions:

Early Adopters

Individuals or businesses who start using a new product, service, or technology soon after it is launched, before the majority of the population does.

Laggards

Consumers who like to avoid change and rely on traditional products until they are no longer available.

Trialability

The extent to which a product can be tested or used on a limited basis before making a purchase decision.

Diffusion

is the process through which an innovation is communicated through certain channels over time among the members of a social system, typically illustrating how new products, ideas, or practices spread within a population.