Question

Dividends Per Share Windborn Company has 10,000 shares of cumulative preferred 1% stock, $50 par and 50,000 shares of $30 par common stock. The following amounts were distributed as dividends: Year 1 $12,500 Year 2 4,000 Year 3 15,000 Determine the dividends per share for preferred and common stock for each year. Round all answers to two decimal places. If an answer is zero, enter '0'. Year 1 Year 2 Year 3 Preferred stock (Dividends per share) $ $ $ Common stock (Dividends per share) $ $ $

Answer 1

The correct answer is :

Year	Preferred stock Dividend / Share	Common stock Dividend / Share
1	0.50	0.15
2	0.40	0
3	0.60	0.18

Notes:

1. Dividend to be Distributed to cumulative preferred stockholders= 10,000 Shares * $ 50 * 1%

= $ 5,000

2. In Year 2 Since $ 4,000 is Issued, $ 1,000 of Preferred Stock gets cumulated and is paid in Year 3

3.

Year	Total Dividend	Dividend to Preference Share Holders	Dividend to Common StockHolders ( Total DIvidend  -Dividend to Preference Share Holders)
1	12500	5000	7500
2	4000	4000	0
3	15000	6000	9000

4.

Year	Preferred stock Dividend	Shares	Preferred stock Dividend / Share
1	5000	10,000	0.50
2	4000	10,000	0.40
3	6000	10,000	0.60

5.

Year	Common stock Dividend	Shares	Common stock Dividend / Share
1	7500	50,000	0.15
2	0	50,000	0
3	9000	50,000	0.18