Question

# York’s outstanding stock consists of 85,000 shares of noncumulative 7.0% preferred stock with a \$5 par...

York’s outstanding stock consists of 85,000 shares of noncumulative 7.0% preferred stock with a \$5 par value and also 260,000 shares of common stock with a \$1 par value. During its first four years of operation, the corporation declared and paid the following total cash dividends.

 Year 1 total cash dividends \$ 19,100 Year 2 total cash dividends 27,700 Year 3 total cash dividends 230,000 Year 4 total cash dividends 380,000

Use the data in Exercise 11-10 to determine the amount of dividends paid each year to each of the two classes of stock assuming that the preferred stock is cumulative. (Round your "Dividend per Preferred Share" answer to 3 decimal places.)

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Answer #1

Solution:

 Par Value per Preferred share Dividend Rate Dividend per preferred share Number of preferred shares Preferred Dividend Annual Preferred Dividend \$5 7.00% \$0.350 85000 \$29,750 Total Cash dividend Paid Paid to Preferred Paid to common Dividend in arrears at year-end Year 1 \$19,100 \$19,100 \$0 \$10,650 Year 2 \$27,700 \$27,700 \$0 \$12,700 Year 3 \$2,30,000 \$42,450 \$1,87,550 \$0 Year 4 \$3,80,000 \$29,750 \$3,50,250 \$0 Totals \$6,56,800 \$1,19,000 \$5,37,800 \$23,350
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