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

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.