Cash Dividend Distribution at Brambleinc

How much cash dividend did Brambleinc declare?

a) $48500

b) $518000

c) $66500

d) None of these answers are correct.

Answer:

The cash dividend declared by Brambleinc is $84500.

When Brambleinc declared a $84500 cash dividend, it had 3600 shares of 5%, $100 par value cumulative preferred stock outstanding. The company was also one year in arrears on its preferred stock.

The total cash dividend declared by Brambleinc is $84500. The amount of dividend to be distributed to preferred shareholders (considering it's a year in arrears) is $36000. Therefore, the remaining amount which will be distributed to common shareholders is $48500.

The formula to calculate the dividends due to preferred shareholders is: $100 * 5% * 3600 = $18000 for one year. Since the company is one year in arrears on its preferred stock, an additional $18000 is owed for the previous year. This totals to $36000 to be distributed to preferred shareholders.

Subtracting this amount from the total cash dividend gives the amount to be distributed to common stockholders. Therefore, $84500 - $36000 = $48500. Brambleinc will distribute $48500 to its common stockholders.