Question

please help and explain. i don't understand the in arrears calculations needed for this

Dividends Per Share Sandpiper Company has 30,000 shares of cumulative preferred 1% stock, $50 par and 50,000 shares of $20 par common stock. The following amounts were distributed as dividends: Year 1 $37,500 Year 2 7,500 45,000 Year 3 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 'o'. Year 1 Year 2 Year 3 Preferred stock (Dividends per share) $ Common stock (Dividends per share) $

Answer 1

Year 1 Year 2 Year 3 Dividend per share: Preferred stock Dividend per share Common stock Dividend per share 0.75 0.50 0.45 0.25 0.00 Explanation: Amount distributed Preferred dividend Common dividend 37500 15000 22500 7500 7500 0 45000 22500 22500 Preferred dividend per share = Preferred dividend / Preferred shares Common stock dividend = Commonstock dividend / Common shares Preferred Dividend = ($50*1%) * 30,000 shares = $15,000 So Preferred Dividend per year is $15,000. In first year Company had distributed amount of dividend is 37,500. In second year Amount distributed as dividend is $7500, So arrears is $7500 ($15,000 - $7,500). In third year amount distributed as dividend is $45000 and preferred dividend is $22,500 ($15,000 + $7,500).