Question

Cork inc. declared a $160,000 cash dividend. it currently has 6,000 shares of 6%, $100 par value cumulative preferred stock outstanding. it is one year in arrears on its preferred stock. how much cash will cork distribute to the common stockholders?

Answer 1

Cork has to pay preferreds first. Owe 6000 x 6 or 36,000 to preferred holders. So 160k - 36k = $124k left for common.