Question

Dividends Per Share

Seacrest Company has 25,000 shares of cumulative preferred 1% stock, $50 par and 50,000 shares of $25 par common stock. The following amounts were distributed as dividends:

Year 1	$25,000
Year 2	5,000
Year 3	37,500

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'.

	Year 1	Year 2	Year 3
Preferred stock (Dividends per share)	$	$	$
Common stock (Dividends per share)	$	$	$

Answer 1

Calculate Dividend Amount as follows: Preferred Stock Dividend (25,000 shares * $50 <0.01) = $12500 each year Preferred shareholders receives dividend first and remaining amount distributed to common shareholders. Year 1: Distributed Dividend: $25,000 Preferred stockholder per share = $12500/25,000 shares = $0.5 per share Common stockholder per share ($25000-$12500) = $12500/50,000 shares = $0.25 per share Year 2:

Distributed Dividend: $5,000 Preferred stockholder per share = $5,000/25,000 shares = $0.2 per share And ($12500-$5000 = $7500 will be cumulative in next year) Common stockholder per share = $0 because no dividend remaining. Year 3: Distributed Dividend: $37,500 Preferred stockholder per share = ($7,500+$12500)/25,000 shares = $0.8 per share Common stockholder per share ($37500 - $20000) = $17500/50,000 shares = $0.35 per share