Question

On January 2, 2010, Porter Corporation issued 30,000 shares of 6% cumulative preferred stock at $100 par value. On December 31, 2013, Porter Corporation declared and paid its first dividend. What dividends are the preferred stockholders entitled to receive in the current year before any distribution is made to common stockholders?

Answer 1

$720,000

Step-by-step explanation:

The computation of the dividend received by the preferred stockholders is shown below:

= Number of shares issued × cumulative dividend percentage × par value per share × number of shares

= 30,000 shares × 6% × $100 × 4 years

= $720,000

By applying the above formula we can get the dividend received by the preference shareholders