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stock on dividends

Jim Corporation pays its cumulative preferred stockholders $1.60 per share. Jim has 30,000 shares of preferred and 81,000 shares of common. In 2010, 2011, and 2012, due to slowdowns in the economy, Jim paid no dividends. Now in 2013, the board of directors decided to pay out $490,000 in dividends.

How much of the $490,000 does each class of stock receive as dividends? (Omit the "$" sign in your response.)

Preferred stock $
Common stock $


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1 Answer

In this case you would take 1.60 * 30,000 to get 48,000 and then take that number by 4 because it is a cumulative rate for preferred stock which equals 202,000 and then you would subtract that from 450,00 to get 248,000 for common stock. The keyword in this question is cumulative.