1. Jennifer Company reports following amounts for 2008:
| NET INCOME |
125,000 |
| AVERAGE STOCKHOLDERS EQUITY |
500,000 |
| PREFERRED DIVIDENDS |
35,000 |
| PAR VALUE PREFERRED STOCK |
100,000 |
2008 rate of return on common stockholders' equity is:
a. 18.0%.
b. 22.5%.
c. 25.0%.
d. 31.3%.
2. On January 2, 2005, Riley Corporation issued 20,000 shares of 6% cumulative preferred stock at $100 par value. On December 31, 2008, Riley Corporation declared and paid its first dividend. What dividends are preferred stockholders entitled to receive in current year before any distribution is made to common stockholders?
a. $0
b. $120,000
c. $360,000
d. $480,000