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please show all steps AAA Company has the following shares issued and outstanding: 2000 Preferred shares,...

please show all steps

AAA Company has the following shares issued and outstanding: 2000 Preferred shares, $10, cumulative 40000 Common shares Dividends were not paid to the preferred shareholders in the previous three years. In the current year, the Board of Directors declared a $92,000 cash dividend.

REQUIRED: Determine the total dividends paid to each class of shares

REQUIRED: Determine the total dividends paid to each class and the dividend per share to both common and preferred shareholders.

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Answer #1

Solution:

Annual dividend to preferred shareholders = 2000 * $10 = $20,000

Dividend in arrear for preferredt stockholders = $20,000 * 3 = $60,000

Total dividend declared in current year = $92,000

Dividend to be paid to Preferred stockholders = Dividend for current years + Dividend in arrear = $20,000+ $20,000* 3 = $80,000

Dividend to be paid to common stockholders = $92,000 - $80,000 = $12,000

Dividend per share to common shareholders = $12,000 / 40000 = $0.30 per share

Dividend per share to preferred shareholders = $80,000 / 2000 = $40 per share.

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