Question

Weygandt Co. has outstanding 2,500 shares of $100 par, 6% preferred stock and 15,000 shares of $10 par value common.

The following incomplete schedule shows the amount of dividends paid out over the last 4 years and their allocations between PS and CS given two different sets of assumptions, (a) and (b).

Fill in the 10 blank boxes with the appropriate amounts.

Preferred: Noncumulative &

Nonparticipating

Year	Paid Out	Total Paid	Total Paid		Preferred				Common
		to PS	to CS		Annual Dividend*	In Arrears	Partic'n after 6%	Total Paid to PS	6% of Par	Partic'n after 6%	Total Paid to CS
2018	$13,000	$13,000	$0		$13,000	$2,000	$0	$13,000	$0	$0	$0
2019	$26,000	$15,000	$11,000		$15,000	$0	$0	$17,000	$9,000	$0	$9,000
2020	$57,000	$15,000	$42,000		$15,000		$20,625		$9,000	$12,375
2021	$76,000	$15,000			$15,000

Answer 1

6% preferred stock 2500 @ 100 each

           

Common stock of 15000 share @ 10 each    

           

           

Actual dividend to be paid to preference share holders        

                                                                                                   =   2500*100*6%

                                                                                                    =15000

Given preferred stock is non cummulating and non participating     

           

Non-cumulative preference shares are those shares that provide the shareholder fixed dividend amount each year from the company's net profit but in case the company fails to pay the dividend on such preference share to the shareholder in any year then such dividend cannot be claimed by the shareholder in future.

           

After making payment to preference shares remaining profit is distributed among equity holders

Preferred shareholders have priority over a company's income, meaning they are paid dividends before common shareholders.

Year	Paid out	Total paid to Preference stock	Total paid to Common stock
2018	13000	13000	0
2019	26000	15000	11000
2020	57000	15000	42000
2021	76000	15000	61000