Question

Dividends Per Share

Sandpiper Company has 20,000 shares of cumulative preferred 2% stock, $50 par and 50,000 shares of $30 par common stock. The following amounts were distributed as dividends:

Year 1	$40,000
Year 2	16,000
Year 3	60,000

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'.

	Preferred Stock (dividends per share)	Common Stock (dividends per share)
Year 1	$	$
Year 2	$	$
Year 3	$	$

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Answer 1

Preferred stock dividend/year=(20000*$50)*2%=$20000

Since Preferred stock dividend is cumulative;Preferred stock dividend not paid for in one year is carried over and paid for in the next years.

Any balance left over is paid for to common stockholders.

Preferred dividend in arrears for year:

1=0

2=(20000-16000)=$4000

3=0

	Preferred stock dividend	Preferred stock dividend per share	Common stock dividend	Common stock dividend per share
Year 1	20000	(20000/20000)=$1	(40000-20000)=$20000	(20000/50000)=$0.4
Year2	16000	(16000/20000)=$0.8	0	0
Year 3	(4000+20000)=$24000	(24000/20000)=$1.2	(60000-24000)=$36000	(36000/50000)=$0.72