Accounting for Corporations dividends to preferred stockholders help!?

Question

10,000 shares of 4% preferred stock, $75 par. total dividends of the year is 21000.

i tried getting the total preferred dividends by multiplying the shares by the 4% by 75 but got 30,000... how do i put the 21,000 into it?? it's not the book shouldn't it say how!!

Answer 1

.04 x 75 = $3 a share, multiplied by 10,000 is 30,000. You did it right. It sounds like this is an arrears question.

If the company only paid 21,000 in dividends for the year, there would be 9,000 in Dividends in Arrears to preferred stockholders. This is not considered a liability, but should be disclosed in financial statements.