Question

A company had stock outstanding as follows during each of its first three years of operations: 2,000 shares of 8%, $100 par, cumulative preferred stock and 34,000 shares of $10 par common stock. The amounts distributed as dividends are presented below. Determine the total and per-share dividends for each class of stock for each year by completing the schedule. Round dividends per share to the nearest cent. Enter "0" if no dividends are paid.

Answer 1

Answer:

2,000 shares of 8% $100 par cumulative preferred stock = $16,000 (if preferred stock dividends are not paid one year, they accumulate until they are fully paid in the next years)

34,000 shares $10 par common stocks

Year   Dividends        Preferred      Per         Common      Per

                                   stocks           p.s.         stocks          c.s.

1           $12,000         $12,000         $6             $0              $0

2          $16,000         $16,000         $8             $0              $0

3          $24,740         $20,000       $10          $4,740         $0.14

Preferred stock dividends are paid before common stock dividends.