Question

pecan Theatre Inc. owns and operates movie theaters throughout Florida and Georgia. Pecan Theatre has declared the following annual dividends over a six-year period: Year 1, $64,000; Year 2, $192,000; Year 3, $304,000; Year 4, $352,000; Year 5, $448,000; and Year 6, $560,000. During the entire period ending December 31 of each year, the outstanding stock of the company was composed of 40,000 shares of cumulative, 4% preferred stock, $100 par, and 100,000 shares of common stock, $15 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 Year 1. 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

Total dividends per type share:

# Declared //Preferred //Arrears* //Common

1- 64,000 64,000 96,000

2- 192,000 192,000 64,000

3- 304,000 256,000 48,000

4- 352,000 160,000 192,000

5- 448,000 160,000 288,000

6- 560,000 160,000 400,000

Dividends per share:

Year //Preferred //Common

1 1.6 0

2 4.8 0

3 6.4 0.48

4 4 1.92

5 4 2.88

6 4 4

Step-by-step explanation:

as the dividends for preferred are cumulative if insufficient dividends are declared they will be arrear to subsequent years.

40,000 shares x $100 x 4% = $ 160,000

* wedeclare 64,000 the preferred should receive 160,000 thus 96,000 are accumulate to next period

then we declare 192,000

we pay the 160,000 for the year and decrease the arrear for 32,000

we pay the current year and the arrear the rest goes to common stock