Question

Analyzing and Distributing Cash Dividends to Preferred and Common Stocks

Moser Company began business on March 1, 2015. At that time, it issued 10,000 shares of $70 par value, 9% cumulative preferred stock and 100,000 shares of $5 par value common stock. Through the end of 2017, there has been no change in the number of preferred and common shares outstanding.

Required:
a. Assume that Moser declared and paid cash dividends of $0 in 2015, $183,000 in 2016, and $200,000 in 2017. Compute the total cash dividends and the dividends per share paid to each class of stock in 2015, 2016, and 2017.
Round the per share amount to two decimal places.

2015	Total	Per Share
Preferred	$Answer	$Answer
Common	$Answer	$Answer

2016	Total	Per Share
Preferred	$Answer	$Answer
Common	$Answer	$Answer

2017	Total	Per Share
Preferred	$Answer	$Answer
Common	$Answer	$Answer

b. Assume that Moser declared and paid cash dividends of $0 in 2015, $63,000 in 2016, and $180,000 in 2017. Compute the total cash dividends and the dividends per share paid to each class of stock in 2015, 2016, and 2017.
Round the per share amount to two decimal places.

2015	Total	Per Share
Preferred	$Answer	$Answer
Common	$Answer	$Answer

2016	Total	Per Share
Preferred	$Answer	$Answer
Common	$Answer	$Answer

2017	Total	Per Share
Preferred	$Answer	$Answer
Common	$Answer	$Answer

Answer 1

Solution :-

Since the Prefers stock is of cumulative in nature, if in any year dividend is not paid. It will get accumulated to next year as liability. Also, preferred stockholders will always have priority of dividend payment over the Common stockholders.

a) Total cash dividends and the dividends per

share paid to each class Of stock :-

* Cumulative preference dividend for two year s = (45000*2) = $ 90,000/.

Balance is paid for Equity or Common stockholders

b) Total cash dividends and the dividends per

share paid to each class of stock :-