There are 7,500 shares of $10 par value participating 9 percent preferred stock outstanding, and 32,500 shares of common stock outstanding. The common stock cash dividend is $.50 per share, and total dividends of $50,000 are distributed. Remaining dividends are shared equally between common and preferred stockholders.

Dividend is simply the profit distributed to shareholders

The distributed dividend is $27,000

The given parameters are:

Start by calculating the dividend paid to the common stockholder

So, we have:

Next, calculate the preferred stock dividend using

So, we have:

The distributed dividend is then calculated using:

This gives

Hence, the distributed dividend is $27,000

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Step-by-step explanation:

There are 7,500 shares of $10 par value participating 9 percent preferred stock outstanding, and 32,500 shares of common stock outstanding. Therefore,

dividend paid to common stockholder =32500(0.50) = $ 16250

Preferred Stock dividend= 7500 (10) (0.09) = $ 6750

considering total dividend paid $ 50000 includes preferred dividend,then free distributable dividend = 50000 - 16250 - 6750 = $ 27000

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