QS 11-12 Dividend allocation between classes of shareholders LO C2

Stockholders equity of Ernst Company consists of 82,000 shares of $5 par value, 10% cumulative preferred stock and 290,000 shares of $1 par value common stock. Both classes of stock have been outstanding since the companys inception. Ernst did not declare any dividends in the prior year, but it now declares and pays a $135,000 cash dividend at the current year-end. Determine the amount distributed to each class of stockholders for this two-year-old company.

	Par Value per Preferred Share	Dividend Rate		Dividend per Preferred Share	Number of Preferred Shares	Preferred Dividend for two years
Calculation of preferred dividend:			%
Total cash dividend
To preferred shareholders
To common shareholders