Question

York's outstanding stock consists of 80,000 shares of cumulative 5% preferred stock with a $5 par value and also 200,000 shares of common stock with a $1 par value. During its first four years of operation, the corporation declared and paid the following total cash dividends 2015 $ 20,000 2016 28,000 2017 200,000 2018 350,000 Determine the amount of dividends paid each year to each of the two classes of stockholders assuming that the preferred stock is cumulative. Also determine the total dividends paid to each class for the four years combined. (Round your "Dividend per Preferred Share" answers to 3 decimal places.)

Answer 1

Solution:

	Par Value per Preferred share	Dividend Rate	Dividend per preferred share	Number of preferred shares	Preferred Dividend
Annual Preferred Dividend	$5	7.50%	$0.375	$80,000	$30,000
	Total Cash dividend Paid	Paid to Preferred	Paid to common	Dividend in arrears at year-end
2015	$20,000	$20,000	$0	$10,000
2016	$28,000	$28,000	$0	$12,000
2017	$2,00,000	$42,000	$1,58,000	$0
2018	$3,50,000	$30,000	$3,20,000	$0
Totals	$5,98,000	$1,20,000	$4,78,000	$22,000