Question

Dividends Per Share

Sandpiper Company has 20,000 shares of cumulative preferred 3% stock, $150 par and 50,000 shares of $15 par common stock. The following amounts were distributed as dividends:

Year 1	$225,000
Year 2	72,000
Year 3	270,000

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'.

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

Answer 1

Answer

	1st year	2nd year	3rd year
Preferred Dividend per share	$                         4.50	$                    3.60	$                   5.40
Common Stock per share	$                         2.70	$                         -	$                   2.42

• Working

	Par Value per Preferred Share	Dividend rate	Dividend per Preferred Share	No. of Preferred Shares	Preferred Dividend
Annual Preferred Dividend:	$                        150	3.00%	$                   4.500	20,000	$            90,000.00
	Total Cash Dividend paid	Paid to Preferred	Paid to Common	Dividends in Arrears at Year end
Year 1	$          225,000.00	$           90,000.00	$        135,000.00	$                          -
Year 2	$            72,000.00	$           72,000.00	$                          -	$          18,000.00
Year 3	$          270,000.00	$        108,000.00	$        162,000.00	$                          -
TOTAL	$          567,000.00	$        270,000.00	$        297,000.00	$                          -

	1st year	2nd year	3rd year
Preferred Dividend:
Total	$              90,000.00	$          72,000.00	$      108,000.00
Dividend per share	$                         4.50	$                    3.60	$                   5.40
Common Stock Dividend:
Total	$            135,000.00	$                         -	$      162,000.00
Dividend per share	$                         2.70	$                         -	$                   2.42