Answered

Welcome to Westonci.ca, where curiosity meets expertise. Ask any question and receive fast, accurate answers from our knowledgeable community. Ask your questions and receive accurate answers from professionals with extensive experience in various fields on our platform. Our platform offers a seamless experience for finding reliable answers from a network of knowledgeable professionals.

Carter Company has $800,000 of 6% preferred stock and $1,200,000 of common stock outstanding, each having a par value of $10 per share. No dividends have been paid or declared during the last two years, 2020 and 2019. As of December 31, 2021, the Board of Directors has decided to distribute $420,000 in cash dividends and needs help in determining the allocation between Preferred Stockholders and Common Stockholders. Assuming the preferred stock is noncumulative and nonparticipating, how much of the $420,000 will be allocated to Common Stockholders

Sagot :

Answer and Explanation:

The computation of the allocation done between the preferred and common stockholder is shown below

Given that

Total dividend for current year = $420,000

Less: preference dividend -$40,000 ($800,000 × 5%)

Balance for common stock $380,000

The $40,000 should be first distributed to the preference stockholder and the remaining would be allocated to the common stockholder

Thank you for visiting. Our goal is to provide the most accurate answers for all your informational needs. Come back soon. Thanks for stopping by. We strive to provide the best answers for all your questions. See you again soon. Westonci.ca is your go-to source for reliable answers. Return soon for more expert insights.