Question

Hometown​ Grocery, Inc. has​ 41,000 shares of common stock outstanding and​ 5,000 shares of preferred stock outstanding. The common stock is​ $6.00 par​ value; the preferred stock is​ 4% noncumulative with a​ $100.00 par value. On October​ 15, 2018, the company declares a total dividend payment of​ $55,000. What is the amount of dividend that will be paid for each share of common​ stock? ​(Round your answer to the nearest​ cent.)

Answer 1

Answer:

Dividend Per Each Share = $0.85  per share

Explanation:

given data

common stock outstanding = 41,000 shares

preferred stock outstanding = 5,000 shares

common stock =​ $6.00 par​ value

preferred stock  4% noncumulative = $100.00 par value

total dividend payment = $55,000

solution

we get here Total Preferential Divided that is

Total Preferential Divided = Shares × Face Value × 4%     ........1

Total Preferential Divided = 100 × 5000 × 4%

Total Preferential Divided = 20000

so as that Total Equity Dividend is

Total Equity Dividend = Total Dividend - Total Equity Dividend  .............2

Total Equity Dividend = $55,000 - 20000

Total Equity Dividend = 35000

so Dividend Per Each Share will be

Dividend Per Each Share = $\frac{Equity\ Dividend}{Total\ Equity\ Shares}$   ..............3

Dividend Per Each Share = $\frac{35000}{41000}$

Dividend Per Each Share = $0.85  per share