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I need help with stock dividends please!?

A corporation has 1,000,000 shares of $1 par value common stock authorized, and 100,000 shares outstanding. It also has 9% cumulative preferred stock with $100 par value; there are 2,500 of preferred stock authorized, issued and outstanding.

Jan 1 common stock splits 2 for 1

Jan 16 Board declares first dividends ever paid on the company's common stock. The preferred stockholders have one year of dividends in arrears plus one quarter of the required current year dividend. The common stock dividend was $.25 per share. What are the common and preferred stock dividends?

I came up with Preferred dividends: $28,125 Common dividends: $27,500 but I know they're wrong.

1 Answer

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  • ?
    Lv 7
    8 years ago
    Favorite Answer

    Preferred Dividends

    9% x $100 x 2,500 x 1.25 = $28,125

    Common Dividends

    After the stock split there are now 200,000 shares of common stock outstanding.

    200,000 x $0.25 = $50,000

    Source(s): Accounting Fan
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