Question

has stock outstanding as follows: 25,000 shares of cumulative preferred 2% stock, $150 par, and 83,000 shares of $10 par common. During its first four years of operations, the following amounts were distributed as $109,750; third year, $155,630; fourth year, $216,100 Compute the dividends per share on each class of stock for each of year, enter "o" the four years. Round all answers to two dedimal places. If no dividends are paid in a given 1st Year 2nd Year 3rd Year 4th Year

Answer 1

Shares Outstanding
Cumulative preferred 2% stock,$150 par----25,000shares
Total preferred share capital=150*25,000=$3,750,000
Common shares, $10 par----83,000shares
FIRST YEAR
Dividend distributed in first year=$50,250
Dividend due on preferred stock=2% ie,( 0.02*$3,750,000)=$75,000
Hence entire $50,250 distributed to preferred stockholder
Dividend per share on preferred stock=$50250/25,000=$2.01
Dividend on common stock=Nil
Dividend	Preferred	Common
Per share	Stock	Stock
First year	$2.01	Nil
SECOND YEAR
Arrear of dividend on preferred share=75000-50250=$24,750
This years dividend due=$75000
Total dividend due on cumulative preferred shares=$75,000+$24,750=$99750
Actual dividend paid during the year=$109750
Dividend paid to preferred shareholders=$99750
Dividend paid to common shareholders=$109750-99750= $10000
Dividend per share paid to preferred shareholder=$99750/25,000=$3.99
Dividend per share paid to common shareholder=$10000/83000 = $0.12
Dividend	Preferred	Common
Per share	Stock	Stock
Second Year	$3.99	$0.12
THIRD YEAR
Dividend due for preferred shareholders=$75000
Dividend distributed =$155630
Dividend paid to common shareholders=(155630-75000)=$80630
Dividend per share paid to preferred shareholder=75000/25000 = $3.000
Dividend per share paid to common shareholder=$80630/83000 = $0.97
Dividend	Preferred	Common
Per share	Stock	Stock
Third Year	$3.00	$0.97
FOURTH YEAR
Dividend due for preferred shareholders=$75000
Dividend distributed =$216100
Dividend paid to common shareholders=216100-75000	141100
Dividend per share paid to preferred shareholder=75000/25000 = $3.00
Dividend per share paid to common shareholder=$141100/83000 = $1.70
Dividend	Preferred	Common
Per share	Stock	Stock
Fourth Year	$3.00	$1.70
YEAR WISE DIVIDEND PER SHARE
Dividend	Preferred	Common
Per share	Stock	Stock
First year	$2.01	Nil
Second Year	$3.99	$0.12
Third Year	$3.00	$0.97
Fourth Year	$3.00	$1.70