Answer:
Common stockholders will receive $132,000
Explanation:
Common stock = 600,000 shares * $2 par = $1,200,000
Preferred stock = 120,000 shares * $5 stated = $600,000
Common stcok dividends = 600,000 shares * $2 par * 6% = $72,000
Preferred stock dividends = 120,000 shares * $5 stated * 6% = $36,000
As the cumulative and participating, the preferred stock holders are to be paid the dividends which were not paid in the earlier years and the preferred stock holders will participate in the excess profits.
Amount to be paid to preferred stock holders = $36,000 * 3 = $108,000
Amount to be paid to common stock holders = $72,000
Excess amount after payment of dividends = $270,000 - $108,000 - $72,000 = $90,000
$90,000 has to be prorationed between preferred stock and common stock holders.
Common stock holders will receive $90,000 * $1,200,000 / $1,800,000 = $60,000
Common stockholders will receive $72,000 + $60,000 = $132,000
Answer:
$162,000
Explanation:
Dividend distributed to preferred share is based on the predetermined rate associated with these share. When the dividend is declared preferred share dividend is paid first. The remainder is distributed between the common stockholders.
Value of Preferred share = 120,000 shares x $5 par value = $600,000
Preferred Dividend = $600,000 x 6% = $36,000
Accrued dividend for 2 years = 2 x $36,000 = $72,000
Dividend Declared = $270,000
Total preferred Dividend  = $72,000 + $36,000 = $108,000
Dividend Available for Common stockholders = $270,000 - $108,000 = $162,000
