The shareholders’ equity of tru corporation includes $680,000 of $1 par common stock and $1,280,000 par value of 7% cumulative preferred stock. the company paid $68,000 cash dividends in year 1 and another $68,000 cash dividends in year 2. the board of directors of tru declared cash dividends of $158,000 during year 3. what is the amount of the cash dividends that will be paid to the common shareholders in year 3?

The company will pay 25,200 dollars of dividend to common stock

Explanation:

First:

We calculate the dividend for preferred stock:

1,280,000 preferred stock

x 7% dividends

89,600

Next we calculate the arrears dividends:

Year 1  68,000 - 89,600 = 21,600 unpaid

Year 2 68,000 - 89,600 = 21,600 unpaid

Total                                  43,200 unpaid

Now we calculatethe current year:

Year 3               158,000

current year      -89,600

arrears             -43,200

Div for CS         25,200

the new gas bill will be 0

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