Question

Oceanic Company has 15,000 shares of cumulative preferred 3% stock, $100 par and 50,000 shares of $5 par common stock. The following amounts were distributed as dividends:

Year 1 $90,000

Year 2 $18,000

Year 3 $135,000

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

Preferred stock (Dividends per share) Common stock (Dividends per share) $ S Year 1 Year 2 3.00 $ 1.20 0.90 S - Year 3 4.80 $ 1.26 Working notes : Year 1: Total dividends Preferred Dividends (15,000*$100*3%) Common stock Dividends $90.000 $45,000 $45,000 Preferred Stock dividend per share = $45,000/15,000 = $3.00 Common Stock dividends per share =$45,000/50,000 = $0.90 Year 2: Total dividends $18,000 Preferred Dividends (15,000*$100*3%) $45,000 Deficit of prefired dividends S (27.000) ** deficit of preferred dividends can be given in when profits are available why because preference shares are Cumulative Preferrence shares. Preferred Stock dividend per share = $18,000/15,000 = $1.20

Year 3 Total dividends Preferred Dividends (15,000*$100*3%)+27000 Common stock Dividends $135,000 $72,000 $63,000 Preferred Stock dividend per share = $72,000/15,000 = $4.80 Common Stock dividends per share = $63,000/50,000 = $1.26