Question

Dividend Distribution

Rydon Corporation began business on March 1, 2013. At that time, it issued 20,000 shares of $60 par value, seven percent cumulative preferred stock and 100,000 shares of $5 par value common stock. Through the end of 2015, there had been no change in the number of preferred and common shares outstanding.

Required

a. Assume that Rydon declared dividends of $0 in 2013, $183,000 in 2014, and $200,000 in 2015. Calculate the total dividends and the dividends per share paid to each class of stock in 2013, 2014, and 2015. Round to two decimal places.

Year	Preferred Stock	Common Stock	Preferred per share	Common per share
2013	Answer	Answer	Answer	Answer
2014	Answer	Answer	Answer	Answer
2015	Answer	Answer	Answer	Answer

b. Assume that Rydon declared dividends of $0 in 2013, $84,000 in 2014, and $150,000 in 2015. Calculate the total dividends and the dividends per share paid to each class of stock in 2013, 2014, and 2015. Round to two decimal places.

Year	Preferred Stock	Common Stock	Preferred per share	Common per share
2013	Answer	Answer	Answer	Answer
2014	Answer	Answer	Answer	Answer
2015	Answer	Answer	Answer	Answer

Answer 1

Previous year unpaid dividend on preferred shares is paid before any dividend is paid to common shareholders
Annual Dividend on Preferred Stock = 20,000*60*7% = $84,000
Year	Dividend paid	Preferred Stock	Common Stock	Preferred per Share	Common per Share	Outstanding Preferred Dividend
2013	0	0	0	0	0	84000
2014	183000	168000	15000	8.4	0.015	0
2015	200000	84000	116000	4.2	0.116	0
b.
Year	Dividend paid	Preferred Stock	Common Stock	Preferred per Share	Common per Share	Outstanding Preferred Dividend
2013	0	0	0	0	0	84000
2014	84000	84000	0	4.2	0	84000
2015	150000	150000	0	7.5	0	18000