Question

The shareholders' equity of Nick Co. includes the items shown below. The board of directors of Nick declared cash dividends of $4.5 million, $10.5 million, and $52.5 million in each of its first 3 years of operation: 2016, 2017, and 2018, respectively.

Common stock, $1 par, 50,000,000 shares outstanding
Preferred stock, 6%, $100 par, 1,000,000 shares outstanding

Required:
Determine the amount of dividends per share on preferred and common stock for each of the three years. The preferred stock is noncumulative and nonparticipating. (Round final answers to 2 decimal places.)

Answer 1

	Preferred	Common
2016	4500000	0
2017	7500000	3000000
2018	6000000	46500000

workings

	Year 2016
Preferred Stock dividend =1000000*100*6%	6000000
Dividend Paid to Preferred stock dividend	4500000
Preferred stock dividend arrear (600000-450000)	1500000
	Year 2017
Preferred Stock dividend =1000000*100*6%	6000000
Preferred stock dividend arrear (600000-450000)	1500000
Dividend Paid to Preferred stock dividend	7500000
Total dividend declared	10500000
Dividend Available to common stock holder 1050000-7500000	3000000
	Year 2018
Preferred Stock dividend =1000000*100*6%	6000000
Total dividend declared	52500000
Dividend Available to common stock holder 52500000-6000000	46500000