Question

Zale Corporation has outstanding 110,000 shares of 12 percent, $80 par-value cumulative preferred stock and 440,000 shares of no-par-value common stock.

1. During 2019, the corporation distributed dividends of $792,000. What amount will be paid on each share of preferred stock? What amount will be paid on each share of common stock?
2. During 2020, the corporation distributed dividends of $1,672,000. What amount will be paid on each share of preferred stock? What amount will be paid on each share of common stock?
   (Round your answers to 2 decimal places.)

Preferred stock, Year 2019 Common stock, Year 2019 | $ $ per preferred share 0.00 per common share 12.00 per preferred share per common share Preferred stock, Year 2020 Common stock, Year 2020

Answer 1

Zale corporation Year 2019 Preference shareholders are entitled to dividend of 80 12 $9.6 per Preferred share Preference shareholders are entitled to Total dividend of 110000 * 80 12 $1056000 per Preferred share But in year 2019, only $ 792000 was distributed as dividend, therefore, the whole amount goes to PS and nothing to CS Year 2020 Preference shareholders are entitled to dividend of 80 12 $9.6 per Preferred share Preference shareholders are entitled to Total dividend of 110000 * 80* 12 $ 1056000 per Preferred share for 2020arrears of 2019 (1056000 792000) i.e 264000 which makes total of 1320000 CS will receive (1672000 1320000) $ 352000 Required answer PS 2019(792000 110000) $ 7.2 per PS CS- 2019 $0 per CS PS - 2020(1320000/110000) $ 12 per PS CS- 2020(352000/440000) $0.8 per CS