Question

Pecan Theatre Inc. owns and operates movie theaters throughout Florida and Georgia. Pecan Theatre has declared the following annual dividends over a six-year period: Year 1, $32,000; Year 2, $96,000; Year 3, $144,000; Year 4, $184,000; Year 5, $224,000; and Year 6, $288,000. During the entire period ending December 31 of each year, the outstanding stock of the company was composed of 20,000 shares of cumulative, 4% preferred stock, $100 par, and 100,000 shares of common stock, $10 par.

Required:

1. Determine the total dividends and the per-share dividends declared on each class of stock for each of the six years. There were no dividends in arrears at the beginning of Year 1. Summarize the data in tabular form. If required, round your answers to two decimal places. If the amount is zero, please enter "0".

						Preferred Dividends								Common Dividends
Year		Total Dividends				Total				Per Share				Total				Per Share
Year 1		$   32,000				$				$				$				$
Year 2		96,000
Year 3		144,000
Year 4		184,000
Year 5		224,000
Year 6		288,000
										$								$

Answer 1

Solution

Year	Total Dividend	Preference Shares (20000)				Equity Shares (100000)
		Total	Paid	Per Share	Arrear	Paid	Per Share
1	$        32,000.00	$      80,000.00	$      32,000.00	$        1.60	$   48,000.00	$                     -	$             -
2	$        96,000.00	$ 1,28,000.00	$      96,000.00	$        4.80	$   32,000.00	$                     -	$             -
3	$    1,44,000.00	$ 1,12,000.00	$ 1,12,000.00	$        5.60	$                  -	$      32,000.00	$        0.32
4	$    1,84,000.00	$      80,000.00	$      80,000.00	$        4.00	$                  -	$ 1,04,000.00	$        1.04
5	$    2,24,000.00	$      80,000.00	$      80,000.00	$        4.00	$                  -	$ 1,44,000.00	$        1.44
6	$    2,88,000.00	$      80,000.00	$      80,000.00	$        4.00	$                  -	$ 2,08,000.00	$        2.08

Notes:

1. For Preferred Shares, Total column has been calculated as (Current Year dividend + Arrear Dividend)

2. Preferred Share dividend payable each year = 20000 x 100 x 4% = 80000