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Accounting
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Flaming Lip Corporation has 25,000 shares outstanding of 12% $15 par value, cumulative preferred stock.  In 2009 and 2010, no dividends were declared on preferred stock.  In 2011, Flaming Lip had a profitable year and decided to pay dividends to stockholders of both preferred and common stock.

If Flaming Lip has $200,000 available for dividends in 2011, how much could it pay to the preferred and common stockholders?

May 4th, 2015

Annual Preferred Dividend=25000 shares*15=$375000*6%=$22,500

Preferred Dividend for 2009,2010 and 2011=$22500+$22,500+$22,500=$67,500

Common Dividend for 2009 and 2010 will be Zero.

Common Dividend for 2011 will be=$200,000-$67,500=$132500

May 4th, 2015

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