Colorful, Inc. was incorporated on January 1, 2016. Colorful issued 15,000 shares of common stock and 800 shares of preferred stock on that date. The preferred stock is cumulative, $100 par, with a 12% dividend rate. Colorful has not paid any dividends yet. In 2019, Colorful had its first profitable year, and on December 31, 2019, Colorful declared a total dividend of $44,000. What is the total amount that will be paid to preferred shareholders and common shareholders?
Colorful, Inc. was incorporated on January 1, 2016. Colorful issued 15,000 shares of common stock and 800 shares of preferred stock on that date. The preferred stock is cumulative, $100 par, with a 12% dividend rate. Colorful has not paid any dividends yet. In 2019, Colorful had its first profitable year, and on December 31, 2019, Colorful declared a total dividend of $44,000. What is the total amount that will be paid to preferred shareholders and common shareholders?
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter16: Retained Earnings And Earnings Per Share
Section: Chapter Questions
Problem 5MC: Kent Corporation was organized on January 1, 2014. On that date, it issued 200,000 shares of 10 par...
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1) Colorful, Inc. was incorporated on January 1, 2016. Colorful issued 15,000 shares of common stock and 800 shares of
Expert Solution
Step 1
First, compute the annual preferred dividend as shown below:
Annual preferred dividend = 800*$100*12%
Annual preferred dividend = $9,600
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