CUMULATIVE PREFERRED DIVIDENDS Capital stock of Barr Company includes:

Capital stock:

Common stock, $10 par, 150,000 shares outstanding $1,500,000 Preferred stock, 12 percent cumulative, $100 par, 5,000 shares outstanding 500,000 As of December 31, 2009, three years’ dividends are in arrears on the preferred stock.

During 2009, Barr plans to pay dividends that total $460,000.

Required:

. Determine the amount of dividends that will be paid to Barr’s common and preferred stockholders in 2010.

. If Barr paid $280,000 of dividends, determine how much each group of stockholders would receive.

Exercise