Nutritious Pet Food Company’s board of directors declares a cash dividend of $5,000 on June 30. At that time, there are 3,000 shares of $5 par value 5% preferred stock outstanding and 7,000 shares of $1 par value common stock outstanding. How much of the cash dividend is for the preferred stock?

Nutritious Pet Food Company’s board of directors declares a cash dividend of $5,000 on June 30. At that time, there are 3,000 shares of $5 par value 5% preferred stock outstanding and 7,000 shares of $1 par value common stock outstanding. How much of the cash dividend is for the preferred stock?

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter14: Corporation Accounting

Section: Chapter Questions

Problem 12EA: Nutritious Pet Food Companys board of directors declares a cash dividend of $5,000 on June 30. At...

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Question

How much of the cash dividend is for the preferred stock?

Definition Definition Type of stock which is granted priority over dividend distributions as compared to common stockholders. Preferred stocks also do not carry any voting rights. Notably, in a case where a company is going to be liquidated, preferred stockholders have a priority claim on the value of assets of the company as quoted in the balance sheet, as compared to the common stockholders.

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