Question

A company had stock outstanding as follows during each of its first three years of operations: 3,000 shares of 8%, $100 par, cumulative preferred stock and 41,000 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.

		Preferred		Common
Year	Dividends	Total	Per Share	Total	Per Share
1	$18,000	$fill in the blank 1	$fill in the blank 2	$fill in the blank 3	$fill in the blank 4
2	24,000	$fill in the blank 5	$fill in the blank 6	$fill in the blank 7	$fill in the blank 8
3	49,360	$fill in the blank 9	$fill in the blank 10	$fill in the blank 11	$fill in the blank 12

Answer 1

  Preferred Common

Year	Dividends	Total	Per Share	Total	Per Share
1	$ 18,000	$ 18,000	$ 6	$ 0	$ 0
2	$ 24,000	$ 24,000	$ 8	$ 0	$ 0
3	$ 49,360	$ 30,000	$ 10	$ 19,360	$ 0.47

Preferred Dividend = (3000 X $100) X 8% = $ 24,000

Preferred dividends are paid before common stocks.

In Year 1, $ 6,000 was remaining to be paid to preferred stock, so it was paid along with Year 3 dividend (24,000 + 6000) = $ 30,000  

To calculate per share for :

Year 1 (18,000 / 3000) = 6

Year 2  (24,000 / 3000) = 8

Year 3  (30,000 / 3000) = 10

For Year 3, after paying preferred stock, $ ( 49,360 - 30,000) = $ 19,360 is remaining to be paid to common stock at ( 19,360 / 41,000) = $ 0.47 per share.