Question

Sabas Company has 20,000 shares of $100 par, 2% cumulative preferred stock and 100,000 shares of $50 par common stock. The following amounts were distributed as dividends: Year 1: $10,000 Year 2: 45,000 Year 3: 90,000 Determine the dividends per share for preferred and common stock for the third year.

Answer 1

	dividend on preferred share
	20,000*100*2%
	40000
				year 1	year 2	year 3
	preferred dividend			10,000	45,000	65000
	common stock			0	0	25000
	dividend per share
	preferred			0.5	2.25	3.25
	Common stock			0	0	0.25
	year 3
	preferred stock		3.25
	common stock		0.25