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Need help with common and preferred stock dividends!?

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 7 issued 10,000 new shares of common stock

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 think both were marked wrong on my project. Any help is appreciated

1 Answer

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  • 8 years ago
    Favorite Answer

    Your answer for Preferred Dividend is correct.

    The answer for common dividend should be $52,500.

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