Question

eBook Calculator Dividends Per Share --- Lightfoot Inc., a software development firm, has stock outstanding as follows: 10,000 shares of cumulative preferred 2% stock, $25 par, and 13,000 shares of $125 par common. During its first four years of operations, the following amounts were distributed as dividends: first year, $1,900; second year, $3,200; third year, $21,600; fourth year, $44,780. Calculate the dividends per share on each dass 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 "o". 1st Year 2nd Year 4th Year 3rd Year 0.50 x Preferred stock (dividend per share) 0.19 ✓ 0.32 ✓ Common stock (dividend per share) 0 0 . . Fodbad Che My Wor Is the preferred stock cumulative or non-cumulative stock? Determine what amount of current dividends that preferred stock should receive per year. Is the question asking for a per share amount or total amount per class of stock? Previous Next Check My Work do 6:10 PM 9/19/2020 o GU !! arch a

Answer 1

Preferred dividend= 10000*$25*2%= $5000

Calculation of Preferred stock and Common stock dividend

	Total Dividend	Preferred stock		Common stock
		Amount	Dividend per share	Amount	Dividend per share
1st Year	$1900	$1900	(1900/10000)= $0.19	0	0
2nd Year	$3200	$3200	(3200/10000)= 0.32	0	0
3rd Year	$21600	$9900	(9900/10000)= 0.99	(21600-9900)= 11700	(11700/13000)= 0.90
4th Year	$44780	$5000	(5000/10000)= 0.50	(44780-5000)= 39780	(39780/13000)= 3.06

Dividend in arrears for Year 1= Total dividend to be paid-Dividend paid

= $5000-1900= $3100

Dividend in arrears for Year 2= Total dividend to be paid-Dividend paid

= $5000-3200= $1800

Dividend to be paid in Year 3= Total dividend to be paid+Dividend in arrears for Year 1+Dividend in arrears for Year 2

= $5000+3100+1800= $9900

	1st Year	2nd Year	3rd Year	4th Year
Preferred stock (dividend per share)	$0.19	$0.32	$0.99	$0.50
Common stock (dividend per share)	$0	$0	$0.90	$3.06

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