Question

Sabas Company has 20,000 shares of $100 par, 1% non-cumulative preferred stock and 100,000 shares of $50 par common stock. The following amounts were distributed as dividends:
Year 1: $10,000

Year 2: 15,000

Year 3: 90,000

Determine the dividends per share for preferred and common stock for each year

Answer 1

Answer:

                                            Year 1             Year 2               Year 3

Preferred stock (A ÷ C)        $0.50           $0.75                  $1

Common stock (B ÷ D)           $0                $0                      $0.70

Explanation:

The computations are shown below:

Preferred shares = 20,000 shares (C)

Common stock  shares = 100,000 shares (D)

Preferred dividend = 20,000 shares × $100 × 1% = $20,000

Particulars                         Year 1             Year 2               Year 3

Total dividend                    $10,000        $15,000            $90,000

Preference dividend (A)     $10,000       $15,000             $20,000

Common shares                   $0                 $0                    $70,000

dividend (B)

Dividend per share = (Total dividend) ÷ (number of shares)

Preferred stock (A ÷ C)        $0.50           $0.75                  $1

Common stock (B ÷ D)           $0                $0                      $0.70