Question

Dividends Per Share

Imaging Inc., a developer of radiology equipment, has stock outstanding as follows: 21,000 shares of cumulative preferred 3% stock, $110 par, and 70,000 shares of $20 par common. During its first four years of operations, the following amounts were distributed as dividends: first year, $46,410; second year, $102,190; third year, $129,920; fourth year, $161,000.

Compute 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)	$2.21	$	$	$
Common stock (dividend per share)	$	$	$	$

Answer 1

Particulars	Year 1	Year 2	Year 3	Year 4
Total Dividends declared (a)	$46410	$102190	$129920	$161000
Preferred Dividend (For current year) (b)	$46410	$69300	$69300	$69300
Preferred Dividend in arrears (c)	$0	($69300 - $46410) =$22890	$0	$0
Total preferred dividends (d) = (b) + (c)	$46410	$92190	$69300	$69300
Common Dividend (e) = (a) – (d)	$0	$10000	$60620	$91700
Dividend per Share :
Preferred Stock [Total preferred Dividend (d)]/21000 shares	$2.21	$4.39	$3.30	$3.30
Common Stock [Common Dividend (e)]/70000 shares	$0	$0.14	$0.87	$1.31

Preferred Dividend = 21000 shares * $110 * 3% = $69300