Question

Mays, Inc. had net income for 2014 of $1,060,000 and earnings per share on common stock of $5. Included in the net income was $150,000 of bond interest expense related to its long-term debt. The income tax rate for 2014 was 30%. Dividends on preferred stock were $200,000. The payout ratio on common stock was 25%. What were the dividends on common stock in 2014?

Answer 1

Answer:

The dividends on common stock in 2014 for Mays, Inc was:

Dividends paid=$2650

Explanation:

1. You must follow the formula below to find out the Dividends Paid by Mays inc,

Payout ratio = (dividends paid/net earnings for the period) x 100 then,  

Dividends paid= (Payout Ratio/100) x net earnings for the period

Dividends paid= (25%/100)x$ 1'060.000

Dividends paid=$2650