Mason Transport Dividends Calculation
How much of the $13,000 will preferred stockholders of Mason Transport receive?
A. $1,980
B. $3,960
C. $1,083
D. None of the answer choices are correct
Answer:
The preferred stockholders of Mason Transport will receive $1,980 of the $13,000.
To calculate the amount of dividends that the preferred stockholders of Mason Transport will receive, we use the given information that the company has 5% Cumulative Preferred Stock Dividend. This means that the preferred stockholders are entitled to receive a dividend of 5% of the preferred stock's par value each year.
In this case, the preferred stock has a par value of $12 per share, and the total amount of preferred stock outstanding is $39,600.
For the year 2014, Mason Transport declares $13,000 of dividends. We need to calculate the amount that the preferred stockholders will receive:
Dividend for Preferred Stock = Total Preferred Stock * 5%
Dividend for Preferred Stock = $39,600 * 5%
Dividend for Preferred Stock = $1,980
Therefore, the preferred stockholders of Mason Transport will receive $1,980 of the $13,000 dividends declared in 2014.