Question

Imaging Inc., a developer of radiology equipment, has stock outstanding as follows: 13,000 shares of cumulative preferred 1% stock, $120 par, and 43,000 shares of $5 par common. During its first four years of operations, the following amounts were distributed as dividends: first year, $10,400; second year, $30,800; third year, $46,350; fourth year, $83,540. Compute 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".

Answer 1

Dividend on preferred stock = 13,000*$120*1% = $15,600 per year

	Preferred stock	Common stock
	Amount	Dividend per share	Amount	Dividend per share
First year	$10,400	$0.8 (10,400/13,000)	0	0
Second year	20,800 (15,600-10,400+15,600)	1.6 (20,800/13,000)	10,000 ($30,800-20,800)	0.23 (10,000/43,000)
Third year	15,600	1.2 (15,600/13,000)	30,750 (46,350-15,600)	0.72 (30,750/43,000)
Fourth year	15,600	1.2	67,940 (83,540-15,600)	1.58 (67,940/43,000)