# Berman Inc. has 6,000 shares of 6%, $50 par value, cumulative preferred stock and 50,000 shares... ## Question: Berman Inc. has 6,000 shares of 6%,$50 par value, cumulative preferred stock and 50,000 shares of $1 par value common stock outstanding at December 31, 2013, and December 31, 2014. The board of directors declared and paid an$12,000 dividend in 2013. In 2014, $72,000 of dividends are declared and paid. What are the dividends received by the common stockholders in 2014? ## Preferred Stock: The term preferred stock is viewed by market participants as a hybrid of debt and equity security. It generally has no voting rights like common stock but comes with a fixed dividend payment. ## Answer and Explanation: Determine the amount distributed to each class of stockholders for this two-year-old company. Dividend Paid Preferred Stock(6%,par 50) Preference Dividends Paid Preferred Dividends in Arrears Common Stock 2013$12,000 $18,000$12,000 $6,000 0 2014$72,000 $18,000$24,000 $48,000 Preferred Dividends that should be paid each year is$45,500.if dividends are available

Preferred Dividend should be paid = 6% x $50(par) x 6,000 shares Preferred Dividend should be paid =$18,000

Preferred stock is a cumulative type so dividends not paid in prior years will be paid in the year it becomes viable.