Reference no: EM131808490

Problem

The Chester Company has issued 10%, nonparticipating, cumulative preferred stock with a total par value of $400,000 and common stock with a total par value of $800,000. No dividends are in arrears. How much cash will be paid to the preferred stockholders and the common stockholders, respectively, if cash dividends of $180,000 are distributed?

a) $80,000 to preferred and $100,000 to common

b) $40,000 to preferred and $140,000 to common

c) $60,000 to preferred and $120,000 to common

d) $55,000 to preferred and $125,000 to common

Can I please have the answer and see the work for solving this problem.