Answer and Explanation:
The computation of the dividends per share for preferred and common stock is shown below:-
Annual preferred Dividend = 15000 × $100× 2% = $30,000
Oceanic Company
2011 2012 2013
Net income (A) $67,500 $22,500 $135,000
Less: Total Preferred Dividend paid
Preferred Dividend $30,000 $22,500 $37,500
($30,000 + ($30,000 - $22,500)
Available common stock $37,500 $0 $97,500
Preferred Stock holder
outstanding $15,000 $15,000 $15,000
Common stock shares
outstanding 50,000 50,000 50,000
Dividend per share
Preferred $2.00 $1.50 $2.50
For computing the dividend per share we simply divide preferred dividend by Preferred Stock holder outstanding
Common stock $0.75 $0.00 $1.95
In the same manner for computing the Dividend per share common stock we simply divide the available common stock by common stock shares outstanding.
