Wood Co. owns 2,000 shares of Arlo, Inc.’s 20,000 shares of
$100 par, 6% cumulative, nonparticipating preferred stock and
1,000 shares (2%) of Arlo’s common stock. During year 2, Arlo
declared and paid dividends of $240,000 on preferred stock. No
dividends had been declared or paid during year 1. In addition,
Wood received a 5% common stock dividend from Arlo when the
quoted market price of Arlo’s common stock was $10 per share.
What amount should Wood report as dividend income in its year
2 income statement?