Question

Coronado Company has outstanding 2,600 shares of $100 par, 7% preferred stock and 14,600 shares of $10 par value common. The following schedule shows the amount of dividends paid out over the last 4 years.

Allocate the dividends to each type of stock under assumptions (a) and (b). Express your answers in per-share amounts using the format shown below. (Round the rate of participation to 4 decimal places, e.g.1.4278%. Round answers to 2 decimal places, e.g. $6.85.)

				Assumptions
				(a) Preferred, noncumulative, and nonparticipating				(b) Preferred, cumulative, and fully participating
Year		Paid-out		Preferred		Common		Preferred		Common
2018		$13,200		$		$		$		$
2019		$28,100		$		$		$		$
2020		$56,100		$		$		$		$
2021		$76,000		$		$		$		$

Answer 1

		Preferred non - cumulative and non - participating		Preferred cumulative and fully participating
		(i) / 2600	(ii) / 14600	(iii) / 2600	(iv) / 14600
	Paid - out	Preferred per share	Common per share	Preferred per share	Common per share
2018	$     13,200	$                 5.08	0	$           5.08	0
2019	$     28,100	$                 7.00	$         0.68	$           8.92	$           0.34
2020	$     56,100	$                 7.00	$         2.60	$         13.82	$           1.38
2021	$     76,000	$                 7.00	$         3.96	$         18.72	$           1.87
Workings:
		Preferred non - cumulative and non - participating		Preferred cumulative and fully participating
		(i)	(ii)	(iii)	(iv)
	Paid - out	Preferred Stock	Common Stock	Preferred Stock	Common Stock
2018	$     13,200	$            13,200	0	$       13,200	0
2019	$     28,100	$            18,200	$       9,900	$       23,200	$        4,900
2020	$     56,100	$            18,200	$     37,900	$       35,926	$      20,174
2021	$     76,000	$            18,200	$     57,800	$       48,670	$      27,330
Preferred Dividend	=	2600 X $100 X 7%	=	$       18,200
2019
Accrued Preferred dividend (2018)	=	($18200 - $13200)	=	$         5,000
To Preferred Stock	=	$18200 + $5000	=	$       23,200
To Common stock	=	$28100 - $23200	=	$         4,900
2020
To Preferred Stock	=	2600 X $100 X 7%	=	$       18,200
To Common stock	=	14600 X $10 X 7%	=	$       10,220
Total			=	$       28,420
Amount available for participation	=	($56100 - $28420)	=	$       27,680
Percentage of Participation	=	[$27680 / ($260000 + $146000)]	=	6.8177%
Participation allocated:
To Preferred Stock	=	$260000 X 6.8177%	=	$       17,726
To Common stock	=	$146000 X 6.8177%	=	$         9,954
Total
To Preferred Stock	=	$18200 + $17726	=	$       35,926
To Common stock	=	$10220 + $9954	=	$       20,174
2021
To Preferred Stock	=	2600 X $100 X 7%	=	$       18,200
To Common stock	=	14600 X $10 X 7%	=	$       10,220
Total			=	$       28,420
Amount available for participation	=	($76000 - $28420)	=	$       47,580
Percentage of Participation	=	[$28420 / ($260000 + $146000)]	=	11.7192%
Participation allocated:
To Preferred Stock	=	$260000 X 11.7192%	=	$       30,470
To Common stock	=	$146000 X 11.7192%	=	$       17,110
Total
To Preferred Stock	=	$18200 + $17726	=	$       48,670
To Common stock	=	$10220 + $9954	=	$       27,330