Farley Inc. declares a $55,000 cash dividend on December 31, 2017. The required annual dividend on preferred

Question:

Farley Inc. declares a $55,000 cash dividend on December 31, 2017. The required annual dividend on preferred stock is $10,000. Determine the allocation of the dividend to preferred and common stockholders assuming the preferred stock is cumulative and dividends are 1 year in arrears.

Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...