Question

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.)

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