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Your answer is incorrect. Try again. Vaughn Inc. declares a $62,000 cash dividend on December 31, 2020. The required annual dividend on preferred stock is $11,100. Determine the allocation of the dividend to preferred and common stockholders assuming the preferred stock is cumulative and dividends are 1 year in arrears. Allocated to Common Stock Allocated to Preferred Stock Click if you would like to Show Work for this question: Open Show Work
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Allocated to Common Stock - 39800
Allocated to Preferred Stock - 22200
Workings and Explanation
| Total Dividend Decelared | 62000 | |
| Dividend to Preferred Stock | ||
| Dividend for Current Year | 11100 | |
| Dividend in Arrears | 11100 | 22200 |
| Dividend to Common Stock | 39800 |
When Preferred Stock is Cumulative then Dividend which is arrears is paid first when a company declare Dividend.
