# Crane Company, has 5000 shares of 5%, $50 par value, cumulative preferred stock and 100000 shares... ## Question: Crane Company, has 5000 shares of 5%,$50 par value, cumulative preferred stock and 100000 shares of $1 par value common stock outstanding at December 31, 2018, and December 31, 2017. The board of directors declared and paid an$8200 dividend in 2017. In 2018, $41800 of dividends are declared and paid. What are the dividends received by the preferred stockholders in 2018? a.$16800

b. $33200 c.$25000

d. $12500 ## What Are Preferred Shares: Companies are allowed to have multiple classes of stock including both Common and Preferred Shares. Preferred Shares usually possess certain features that common shares do not (e.g. a cumulative dividend or increased voting rights). ## Answer and Explanation: Annual Preferred dividend = 0.05*50*5,000 =$12,500 annually

Dividends in arrears = 12,500 - 8,200

=$4,300 Preferred dividend in 2018 = Annual dividend + dividends in arrears = 12,500 + 4,300 =$16,800