Question

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'.

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