Question

chart Corporation had both common stock and preferred stock outstanding from 2012 through 2014. Information about cach stock for the three years follows. Type Preferred Common Par Value 100 20 Shares Outstanding 40,000 600,000 Other 7% cumulative The company paid $140,000, s800,000, and $1,100,000 in dividends for 2012 through 2014, respectively. The market price per common share was $15 and $17 per share at the end of years 2013 and 2014, respectively. REQUIRED 1. Determine the dividends per share and total dividends paid to the common and preferred stockholders each year. (Round to the nearest cent

Answer 1

1.

When preferred stock is cumulative

	Cumulative preferred stock dividends		Common stock dividends		Total dividends allocated
	$ Amount	Per share	$ Amount	Per share
2012	140,000	3.5	0	0	140,000
2013
Dividend in arrears, 2012	140,000	3.5	0	0
2013 dividends	280,000	7	380,000	0.63
Total	420,000	10.5	380,000	0.63	800,000
2014	280,000	7	820,000	1.37	1,100,000

2.

When preferred stock is non-cumulative

	Cumulative preferred stock dividends		Common stock dividends		Total dividends allocated
	$ Amount	Per share	$ Amount	Per share
2012	140,000	3.5	0	0	140,000
2013	280,000	7	520,000	0.87	800,000
2014	280,000	7	820,000	1.37	1,100,000

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