Question

Sandpiper Company has 15,000 shares of cumulative preferred 3% stock, $100 par and 50,000 shares of...

Sandpiper Company has 15,000 shares of cumulative preferred 3% stock, $100 par and 50,000 shares of $20 par common stock. The following amounts were distributed as dividends: Year 1 $112,500 Year 2 22,500 Year 3 135,000 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'.

Homework Answers

Answer #1
Year 1 Year 2 Year 3
Preferred Stock (Dividend Per Share) 3.00 1.50 4.50
Common Stock(Dividend Per Share ) 1.35 0 1.35

Explanation;  

Year 1 ;

Total Dividend $112,500
Preferred Dividend (15,000×3%×$100) $45,000
Common Stock Dividend $675,000

Preferred Stock Dividend Per Share =45,000/15,000 = 3

Common Stock Dividend Per Share = $675,000/50,000 = 1.35

Year 2

Total Dividends $22,500
Preferred Dividend (15,000×3%×$100) $45,000
Deficit of Preferred Dividends $(22,500)

Preferred Stock Dividend Per Share = 22,500/15,000 = 1.5

Year 3

Total Dividend $135,000
Preferred Dividend (15,000×3%×$100)+$22,500 $67,500
Common Stock Dividend $67,500

Preferred Stock Dividend Per Share = 67,500/15,000 =4.5

Common Stock Dividend Per Share =67,500/50,000 =1.35

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