## Question

###### How doe we find the 2018 dividends in arrears as well as the 2019 current year...

How doe we find the 2018 dividends in arrears as well as the 2019 current year dividends?

Western Telecom, Inc. Stockholders' Equity Paid-in capital: Preferred stock, 6%, $12 par, 100,000 shares authorized, 21,000 shares issued and outstanding Common stock, $4.00 par, 500,000 shares authorized, 370,000 shares issued and outstanding $ 252,000 1,480,000 610,000 Paid-in capital in excess of par-common Total paid-in capital $ 2,342,000 190,000 Retained earnings $ 2,532,000 Total stockholders' equity

Western Telecom, Inc., has the following stockholders' equity: k on the icon to view the stockholders' equity data.) Requirement 1. Assume the preferred stock is cumulative. Compute the amount of dividends to preferred and common shareholders for 2018 and 2019 if total dividends are $5,120 in 2018 and $52,000 in 2019. Compute the dividends for 2018, then for 2019. (Complete all answer boxes. Enter a "0" for any zero balances.) Class of Stock 2019 2018 5,120 Preferred $ 0 Common Total $ 5,120

## Answers

Preferred stockholders has the right to get dividends at 6% every year. after paying preferred dividends then only dividends will pay to common stockholders. if any amount balance to be paid for preferred stockholders, it will be considered as arears and need to be paid in next year.

2018 Dividends for preferred stockholders (21,000*$12*6%) $ 15,120 Less: Dividends paid $ (5,120) Preferred stock arrears $ 10,000

2019 Dividends for preferred stockholders (21,000*$12*6%) $ 15,120 Add: 2018 dividends arrears $ 10,000 Dividends to be paid to preferred stock holders in 2019 $ 25,120

Total dividends declared in 2019 $ 52,000 Less: Dividends to preferred stockholders $ (25,120) Dividends to common stockholders $ 26,880

2018 2019 Preferred $ 5,120 $ 25,120 Common $ - $ 26,880 $ 5,120 $ 52,000 You can reach me over comment box if you have any doubts. Please rate this answer

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