Hopkins,Inc

Multiple Choice

Hopkins,Inc.has 1,000 shares of common stock and 1,000 shares of preferred stock outstanding.The preferred stock has a cumulative dividend preference.Both classes of stock have a par value of $10.The preferred stock has a dividend rate of 6 percent.Hopkins failed to pay a dividend during the prior year.During the current year,the board of directors declares dividends totaling $2,000.Accordingly,the company will distribute dividends in the amount of:

A) $2,000 to the preferred shareholders.
B) $1,000 to each class of shareholders.
C) $1,200 to the preferred shareholders and $800 to the common shareholders.
D) $1,600 to the preferred shareholders and $400 to the common shareholders.