Question

Yosemite Bike Corp. manufactures mountain bikes and distributes them through retail outlets in California, Oregon, and Washington. Yosemite Bike has declared the following annual dividends over a six-year period ended December 31 of each year: 20Y1, $24,250; 20Y2, $9,000; 20Y3, $106,750; 20Y4, $95,000; 20Y5, $110,000; and 20Y6, $165,000. During the entire period, the outstanding stock of the company was composed of 25,000 shares of cumulative preferred 2% stock, $80 par, and 100,000 shares of common stock, $4 par. Required: 1. Determine the total dividends and the per-share dividends declared on each class of stock for each of the six years. There were no dividends in arrears at the beginning of 20Y1. Summarize the data in tabular form. If required, round your answers to two decimal places. If the amount is zero, please enter "0".

Answer 1

Answer:

See the explanation below.

Explanation:

Note: Find attached the summary table.

Total annual dividend payable to cumulative preferred 2% stock = 25,000 * $80 * 2% = $40,000

For 20Y1

Dividend declared = $24,250

Total payable to cumulative preferred 2% stock = $24,250

Cumulative preferred stock per share = $24,250 / 25,000 = $0.97 per share

Total cumulative preferred carried forward = $40,000 - $24,250 = $15,750

Total dividend payable to common stock = $0

Common stock dividend per share = $0

For 20Y2

Dividend declared = $9,000

Total payable to cumulative preferred 2% stock = $9,000

Cumulative preferred stock per share = $9,000 / 25,000 = $0.36 per share

Total cumulative preferred carried forward = $40,000 - $9,000 + $15,750 = $46,750

Total dividend payable to common stock = $0

Common stock dividend per share = $0

For 20Y3

Dividend declared = $106,750

Total payable to cumulative preferred 2% stock = $40,000 + $46,750 = $86,750

Cumulative preferred stock per share = $86,750 / 25,000 = $3.47 per share

Total dividend payable to common stock = $106,750 - $86,750 = $20,000

Common stock dividend per share = $20,000 / 100,000 = $0.20 per share

For 20Y4

Dividend declared = $95,000

Total payable to cumulative preferred 2% stock = $40,000

Cumulative preferred stock per share = $40,000 / 25,000 = $1.60 per share

Total dividend payable to common stock = $95,000 - $40,000 = $55,000

Common stock dividend per share = $55,000 / 100,000 = $0.55 per share

For 20Y5

Dividend declared = $110,000

Total payable to cumulative preferred 2% stock = $40,000

Cumulative preferred stock per share = $40,000 / 25,000 = $1.60 per share

Total dividend payable to common stock = $110,000 - $40,000 = $70,000

Common stock dividend per share = $70,000 / 100,000 = $0.70 per share

For 20Y6

Dividend declared = $165,000

Total payable to cumulative preferred 2% stock = $40,000

Cumulative preferred stock per share = $40,000 / 25,000 = $1.60 per share

Total dividend payable to common stock = $165,000 - $40,000 = $125,000

Common stock dividend per share = $125,000 / 100,000 = $1.25 per share

Download xlsx