Question

Dividends Per Share Imaging Inc., a developer of radiology equipment, has stock outstanding as follows: 12,000 shares of cumulative preferred 4 % stock, $130 par, and 40,000 shares of $10 par common. During its first four years of operations, the following amounts were distributed as dividends: first year, $41,760; second year, $93,040; third year, $114,160; fourth year, $136,800. 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 "0". 4th Year 3rd Year 2nd Year 1st Year Preferred stock (dividend per share) Common stock (dividend per share)

Answer 1

SOLUTION

Preferred dividend = 12,000*$130*4% = 62,400

Particulars	Year 1	Year 2	Year 3	Year 4
Total dividends declared (a)	41,760	93,040	114,160	136,800
Preferred dividend for current year (b)	41,760	62,400	62,400	62,400
Preferred dividend in arrears (c)	0	20,640	0	0
Total Preferred dividend (d=b+c)	41,760	83,040	62,400	62,400
Common dividend (e=a-d)	0	10,000	51,760	74,400
Dividend per share:
Preferred stock (Total Preferred dividend (d) / 12,000 shares)	3.48	6.92	5.20	5.20
Common stock (Common dividend(e) / 40,000 shares)	0	0.25	1.29	1.86