QS 13-12 Dividend allocation between classes of shareholders LO C2 Stockholders' equity of Ernst Company consists of 80,000 shares of $5 par value, 8% cumulative preferred stock and
250,000 shares of $1 par value common stock. Both classes of stock have been outstanding since the company's
inception. Ernst did not declare any dividends in the prior year, but it now declares and pays a $110,000 cash dividend
at the current year-end.
Determine the amount distributed to each class of stockholders for this two-year-old company.
Par Value per
Preferred
Share
Dividend
Rate
Dividend per
Preferred
Share
Number of
Preferred
Shares
Preferred
Dividend for
two years
%
Calculation of preferred dividend:
Total cash dividend
To preferred shareholders
To common shareholders
$
0