Question

Dividends Per Share Lightfoot Inc., a software development firm, has stock outstanding as follows: 10,000 shares of cumulative preferred 4% stock, $25 par, and 13,000 shares of $50 par common. During its first four years of operations, the following amounts were distributed as dividends: first year, $3,800; second year, $6,300; third year, $30,820; fourth year, $47,180. Calculate 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

	1st Year	2nd Year	3rd Year	4th Year
Preferred stock (dividend per share)	$0.38	$0.63	$1.99	$1
Common stock (dividend per share)	$0	$0	$0.84	$2.86

      Explanations :-

Particulars	1st Year	2nd Year	3rd Year	4th Year
Total dividend declared (a)	$3800	$6300	$30820	$47180
Preferred Dividend (For current year) (b)	$3800	$100	$10000	$10000
Preferred Dividend in arrears (c)	$0	$6200	$9900	$0
Total preferred dividends (d) = (b) + (c)	$3800	$6300	$19900	$10000
Common dividend (e) = (a) – (d)	$0	$0	$10920	$37180
Dividend per share:
Preferred stock [Total Preferred Dividend(d)/10000 Preference shares]	$0.38	$0.63	$1.99	$1
Common stock [Common dividend (e)/13000 common shares]	$0	$0	$0.84	$2.86

Preferred Dividend per year = 10000 shares * 4% * $25 = $10000