Jim Corporation pays its cumulative preferred stockholders $1.80 per share. Jim has 29,000 shares of preferred and 80,000 shares of common. In 2010, 2011, and 2012, due to slowdowns in the economy, Jim paid no dividends. Now in 2013, the board of directors decided to pay out $540,000 in dividends.


How much of the $540,000 does each class of stock receive as dividends?

Preferred stock

$

Common stock

$

I got 52,200 for the price of perferred. Then 52,200 x's 3 years of dividends not paid = 156,600 and subtracted that from 540,000-52200 = 383400. But neither of the answers are correct. I think it is wrong starting at the 52,200 but according to what I find you take- 1.80 x29000= 52200

First you have to calculate the amount of Preferred dividends, so:
$1.80 * 29,000 = Preferred dividends per year, now take this amount * 4 to get the total amount due to Preferred Shareholders and subtract this amount from the total amount of $540,000 to get the amount due to Common Shareholders.

Thank you so much, I was trying to use the four years instead of 3 years :)