Question

Dividends Per Share Seacrest Company has 30,000 shares of cumulative preferred 1% stock, $50 par and 50,000 shares of $10 par common stock. The following amounts were distributed as dividends: 20Y1 $37,500 20Y2 12,000 45,000 20Y3 Determine the dividends per share for preferred and common stock for each year. Round all answers to two decimal places. If an answer is zero, enter 'o'. Preferred Stock (dividends per share) Common Stock (dividends per share) 20Y1 х X 20Y2 X х 2013 х $ х

Answer 1

Preferred Stock Common Stock (Dividend per (Dividend per Share) Share) $ 0.50 $ 0.45 $ 0.40 $ $ 0.60 $ 0.54 20Y1 20Y2 20Y3 Working notes : 20Y1 Total dividends $ Preferred Dividends $ Common stock Dividends $ Preferred Dividends = 30,000*$50*1% = $15,000 Preferred Stock dividend per share = $15,000/30,000 = $0.50 Common stock dividend per share =$22,500/50,000 = $0.45 37,500 15,000 22,500 Year 2: Total dividends $ 12,000 Preferred Dividends $ 12,000 Common stock Dividends $ Preferred Dividends = 30,000*$50*1% = $15,000 Preferred Stock dividend per share = $12,000/$30,000 = $0.40 Arrears preferred dividends ($15,000 - $12,000 = $3,000) can be given in when profits are available why because preference shares are Cumulative Preferrence shares.

Year 3 Total dividends $ Preferred Dividends ($15,000+$3,000) $ Common stock Dividends $ Preferred Stock dividend per share = $18,000/30,000 = $0.60 Common Stock dividends per share = $27,000/50,000 = $0.54 45,000 18,000 27,000