Question

A company had stock outstanding as follows during each of its first three years of operation: 2000 shares of $10, hundred dollars par, preferred stock and 50,000 shares of $10 par common stock. The amounts distributed as dividends are presented below. Determine the total and partial dividends of each class of stock for each year by completing the schedule.

Preferred. Common

Year Dividends Total per share Total per share

1 $10,000

2 25,000

3 60,000

Answer 1

Number of preferred shares = 2,000

Dividend per preferred share = $10

Annual preferred dividend = Number of preferred shares x Dividend per preferred share

= 2,000 x 10

= $20,000

		Preferred		Common
Year	Total dividend	Total	per share	Total	per share
1	10,000	10,000	10,000/2,000 = $5	0	0
2	25,000	20,000	20,000/2,000 = $10	5,000	5,000/50,000 = $.10
3	60,000	20,000	20,000/2,000 = $10	40,000	40,000/50,000 = $0.80

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