Reference no: EM132607930

Question - A corporation has 10,000 shares of 10%, $50 par noncumulative preferred stock outstanding and 20,000 shares of no-par common stock outstanding. At the end of the current year, the corporation declares a dividend of $120,000.

How is the dividend allocated between preferred and common stockholders?

a. The dividend is allocated $5,000 to preferred shareholders and $115,000 to common shareholders.

b. The dividend is allocated $50,000 to preferred shareholders and $70,000 to common shareholders.

c. The dividend is allocated $60,000 to preferred shareholders and $60,000 to common shareholders.

d. The dividend is allocated $12,000 to preferred shareholders and $108,000 to common shareholders.