Question

Sandpiper Company has 30,000 shares of cumulative preferred 2% stock, $50 par and 50,000 shares of $5 par common stock. The following amounts were distributed as dividends: Year 1 $60,000 Year 2 15,000 Year 3 90,000 Determine the dividends per share for preferred and common stock for each year. Round all answers to two decimal places. If an answer is zero, enter '0'. Preferred Stock (dividend per share) Common Stock (dividend per share) Year 1 $ $ Year 2 $ $ Year 3 $ $

Answer 1

Preferred dividend = 30,000 * $50 * 2% = $30,000

If in case of inadequate profits, preferred dividends to be accumulated and paid in the year of adequate profits.

Computation of Dividends allocated to common stock and Preferred stock.

	Total Dividends	Preferred stock	Common stock
Year 1	$60,000	$30,000	$30,000
Year 2	$15,000	$15,000	-
Year 3	$90,000	$45,000	$45,000

Computation of Dividends per share

	Preferred Dividend / share	Common Dividend / share
Year 1	$30,000 / 30,000 = $1	$30,000 / 50,000 = $0.60
Year 2	$15,000 / 30,000 = $0.50	-
Year 3	$45,000 / 30,000 = $1.50	$45,000 / 50,000 = $0.90