Question

Please explain how the answer is achieved. I do not understand. Thank You!

Dividends Per Share Imaging Inc., a developer of radiology equipment, has stock outstanding as follows: 23,000 shares of cumulative preferred 2% stock, $140 par, and 77,000 shares of $15 par common. During its first four years of operations, the following amounts were distributed as dividends: first year, $43,240; second year, $95,560; third year, $133,280; fourth year, $184,520. 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".

	1st Year	2nd Year	3rd Year	4th year
Preferred Stock (dividend per share)
Common Stock (dividend per share)

Answer 1

Solution:

Computation of dividend per share to Preferred and common shareholders
Year	Total Dividends (A)	Preferred dividend per year (B)	Preferred dividend paid ( C )	Preferred dividend in arrear (D) (B - C)	Preferred dividend per share (C/23000)	Common dividend paid ( E )(A - C)	Common dividend per share (E/77000)
1	$43,240.00	$64,400.00	$43,240.00	$21,160.00	$1.88	$0.00	$0.00
2	$95,560.00	$64,400.00	$85,560.00	$0.00	$3.72	$10,000.00	$0.13
3	$133,280.00	$64,400.00	$64,400.00	$0.00	$2.80	$68,880.00	$0.89
4	$184,520.00	$64,400.00	$64,400.00	$0.00	$2.80	$120,120.00	$1.56