Question

# Dividends Per Share Michelangelo Inc., a software development firm, has stock outstanding as follows: 30,000 shares...

Dividends Per Share Michelangelo Inc., a software development firm, has stock outstanding as follows: 30,000 shares of cumulative 3%, preferred stock of \$30 par, and 38,000 shares of \$75 par common. During its first four years of operations, the following amounts were distributed as dividends: first year, \$10,200; second year, \$14,400; third year, \$90,980; fourth year, \$144,420. Calculate the dividends per share on each class of stock for each of the four years. Round all answers to two decimal places. If no dividends are paid in a given year, enter "0". 1st Year 2nd Year 3rd Year 4th Year Preferred stock (dividend per share) \$ \$ \$ \$ Common stock (dividend per share) \$ \$ \$ \$

Solution:

 Computation of dividend per share to Preferred and common shareholders Year Total Dividends (A) Preferred dividend per year (B) Preferred dividend paid ( C ) Preferred dividend in arrear (D) (B - C) Preferred dividend per share (C/30000) Common dividend paid ( E )(A - C) Common dividend per share (E/38000) 1 \$10,200.00 \$27,000.00 \$10,200.00 \$16,800.00 \$0.34 \$0.00 \$0.00 2 \$14,400.00 \$27,000.00 \$14,400.00 \$29,400.00 \$0.48 \$0.00 \$0.00 3 \$90,980.00 \$27,000.00 \$56,400.00 \$0.00 \$1.88 \$34,580.00 \$0.91 4 \$144,420.00 \$27,000.00 \$27,000.00 \$0.00 \$0.90 \$117,420.00 \$3.09