Mason Transport Dividends Calculation

How much of the $13,000 will preferred stockholders of Mason Transport receive?

A. $1,980

B. $3,960

C. $1,083

D. None of the answer choices are correct

Answer:

The preferred stockholders of Mason Transport will receive $1,980 of the $13,000.

To calculate the amount of dividends that the preferred stockholders of Mason Transport will receive, we use the given information that the company has 5% Cumulative Preferred Stock Dividend. This means that the preferred stockholders are entitled to receive a dividend of 5% of the preferred stock's par value each year.

In this case, the preferred stock has a par value of $12 per share, and the total amount of preferred stock outstanding is $39,600.

For the year 2014, Mason Transport declares $13,000 of dividends. We need to calculate the amount that the preferred stockholders will receive:

Dividend for Preferred Stock = Total Preferred Stock * 5%

Dividend for Preferred Stock = $39,600 * 5%

Dividend for Preferred Stock = $1,980

Therefore, the preferred stockholders of Mason Transport will receive $1,980 of the $13,000 dividends declared in 2014.