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Homework answers / question archive / Kaldi Company has 15
Kaldi Company has 15.000 shares of $10 par value 5% cumulative preferred stock and 200.000 shares of $20 par value common stock outstanding. The company paid total cash dividends of 55.000 in its first year of operation. The cash dividend that must be paid to preferred stockholders in the second year before any dividend is paid to common stockholders is: A $10,000 B. $5,000. O C. $2.500. D. 57,500
| Preferred Stock Capital | 150,000 | =15000*10 | |
| Annual Preferred Dividend | 7,500 | =150000*5% | |
| Cash Dividend that must be paid to Preferred Stockholders | $ 10,000 | =7500+(7500-5000) | |
| Correct answer is option A. |
