Question

Dividends on Preferred and Common Stock 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, $24,000; Year 2, $72,000; Year 3, $108,000; Year 4, $138,000; Year 5, $168,000; and Year 6, $210,000. During the entire period ending December 31 of each year, the outstanding stock of the company was composed of 30,000 shares of cumulative, 2% preferred stock, $100 par, and 100,000 shares of common stock, $25 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

Year 1, $24,000; Year 2, $72,000; Year 3, $108,000; Year 4, $138,000; Year 5, $168,000; and Year 6, $210,000.

30,000 shares of 2% preferred stock $100 par

100,000 shares of common stock $25 par

dividends distributed per preferred stock $2 x 30,000 stocks = $60,000

Year Year Year Year Year Year

1 2 3 4 5 6

total dividends 24,000 72,000 108,000 138,000 168,000 210,000

distributed

to preferred 24,000 72,000 84,000 60,000 60,000 60,000

stocks

per preferred 0.80 2.40 2.80 2 2 2

stock

to common 0 0 20,000 78,000 108,000 150,000

stocks

per common 0 0 $0.20 $0.78 $1.08 $1.50

stock