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Buffet Company was organized in January 2018 and has 1,000 shares of $200 par value, 10 percent, noncumulative preferred stock outstanding and 3,000 shares of $1 par value common stock outstanding. Dividends declared and paid each year are $10,000 in 2018, $15,000 in 2019, and $75,000 in 2020. During 2020, the dividends that must be paid to the preferred and common stockholders, respectively, total _____.

Respuesta :

Answer:

$20,000 as preferred stock holders

and 55,000 as common stockholders

Explanation:

given data

shares = 1000

noncumulative preferred stock = $200

rate = 10%

share= 3000

par value = $1

Dividends declared 2018 = $10,000

Dividends declared 2019 = $15,000

Dividends declared 2020 = $75,000

solution

we know that annual payment to preferred stock holders is

annual payment to preferred stock holders = 1,000 × 200 × 10%

annual payment to preferred stock holders =  $20,000

and

we know here  non cumulative and deficient dividends paid in previous years and it will not carry forward to current year as like cumulative preferred stock case

so

remaining amount is the dividends to common stock holders in 2020

remaining amount = total dividends paid - paid to preferred stock holders

remaining amount = $75,000 - $20,000

remaining amount = $55,000

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