Question

Lightfoot Inc., a software development firm, has stock outstanding as follows: 40,000 shares of curmulative preferred 1% stock, $125 par, and 100,000 shares of $150 par common. During its first four years of operations, the following amounts were distributed as dividends: first year, $36,000; secorid year, $58,000; third year, $75,000; fourth year, $124,000. Compute the dividends per share on each class of stock for each of the four years. Round all answers to two decimal places. If no dividends are paid in a given year, enter "o". 4th Year 3rd Year 2nd Year 1st Year $4 Preferred stock (dividend per share) Common stock (dividend per share)

Answer 1

Solution

	1st Year	2nd Year	3rd Year	4th Year
Preferred stock	$                    0.90	$                  1.45	$                  1.40	$                      1.25
Common stock	$                         -	$                      -	$                  0.19	$                      0.74

Working

	Par Value per Preferred share	Dividend rate	Dividend per preffred share	Number of preffered shares	Preffered Dividend
Annual Prefrred Dividend:	125	1.00%	$               1.250	40000	$           50,000.00
	Total Cash dividend Paid	Paid to Preferred	Paid to common	Dividends in arear at year-end
2016	$         36,000.00	$       36,000.00	$ 0	$ 14,000
2017	$         58,000.00	$       58,000.00	$ 0	$ 6,000
2018	$         75,000.00	$       56,000.00	$ 19,000
2019	$      1,24,000.00	$       50,000.00	$ 74,000
Total	$      2,93,000.00	$   2,00,000.00	$       93,000.00	$           20,000.00