Question

Topper Corporation has 60,000 shares of $1 par value common stock and 16,000 shares of cumulative 7%, $100 par preferred stock outstanding. Topper has not paid a dividend for the prior year. If Topper declares a $1.95 per share dividend this year, what will be the total amount they must pay their shareholders?A. $117,000.B. $341,000.C. $327,000.D. $177,000.

Answer 1

so correct option is B. $341,000

Step-by-step explanation:

given data

shares = 60,000

common stock = $1 par value

shares = 16,000

rate 7%

stock outstanding = $100 par preferred

dividend = $1.95 per share

solution

we know that when preferred stock is cumulative than there pay last year prefer dividend in this year with addition of dividend this year

so here

Preferred dividend will be

Preferred dividend = 16,000 shares × 7% × $100 par

Preferred dividend = $112,000

and

he pay in preferred dividend = $112,000 + $112,000

pay in preferred dividend = $224,000

and

he pay dividend to common stockholders is

pay dividend to common stockholder = 60,000 × $1.95

pay dividend to common stockholder = $117,000

so that here total dividends payable will be

total dividends payable = $224,000 + $117,000

total dividends payable = $341,000

so correct option is B. $341,000