Question

Dividends Per Share Sandpiper Company has 10,000 shares of cumulative preferred 1% stock, $50 par and 50,000 shares of $5 par common stock. The following amounts were distributed as dividends: Year 1 $7,500 Year 2 2,500 15,000 Year 3 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) Year 1 Year 2 Year 3

Answer 1

Preferred stock Common stock (dividend per share) (dividend per share) Year 1 s 0.50 $ 0.05 Year 2S 0.25S - Year 3 S 0.75 $ 0.15

Working notes : Year 1: Total dividends $7,500 Preferred Dividends $5,000 Common stock Dividends $2.500 Preferred Dividends = 10,000*$50*1% = $5,000 Preferred Stock dividend per share = $5,000/10,000 = $0.50 Common Stock dividends per share = $2,500/50,000 = $0.05 Year 2: Total dividends $2,500 Preferred Dividends $2.500 Common stock Dividends SO Preferred Stock dividend per share = $2,500/10,000 = $0.25 ** Arrears preferred dividends ($5,000-$2,500 = $2,500) can be given in when profits are available why because preference shares are Cumulative Preferrence shares. Year 3 Total dividends $15,000 Preferred Dividends ($5,000+$2,500) $7,500 Common stock Dividends $7,500 Preferred Stock dividend per share = $7,500/10,000 = $0.75 Common Stock dividends per share = $7,500/50,000 = $0.15