GHI Company has the following stock outstanding:
10,000 shares of $100 Par Value, 8%, Cumulative Preferred Stock
10,000 shares of $1 Par Value, Common Stock
Last year was the first year, GHI Company existed. They did not have enough cash to pay any dividends. This year, however, the company declares and pays $200,000 in dividends.
a) How much of the $200,000 of dividends declared goes to the Preferred Shareholders?
b) How much of the $200,000 of dividends declared goes to the Common Shareholders?