Question

Dividends Per Share Imaging Inc., a developer of radiology equipment, has stock outstanding as follows: 22,000 shares of cumulative preferred 2% stock, $160 par, and 73,000 shares of $20 par common. During its first four years of operations, the following amounts were distributed as dividends: first year, $47,080; second year, $103,720; third year, $135,790; fourth year, $174,060. Compute the dividends per share on each class of stock for each of the four years. Round all answers to two decimal places. If no dividends are paid in a given year, enter "0".

Preferred Stock (Dividend per share)
Year 1 : ?
Year 2 : ?
Year 3 : 3.2
Year 4 : 3.2

Common Stock (Dividend per share)
Year 1 : 0
Year 2 : 0.14
Year 3 : 0.90
Year 4 : 1.42

(I posted this question earlier, the answers that i already have next to the years above are correct. Two of the answers were wrong whoever answered my question, so I am posting this again. Can someone answer Preferred stock (Dividend per share) year 1 and year 2? ASAP).

Answer 1

Preference dividend per year = 22,000*160*2% = $70,400

It is given that $47,080 is distributed as dividend for first year which is less than required $70,400 to be paid, therefore preference dividend paid in part i.e. $47,080/22,000 = $2.14 per share in first year and balance is in arrear i.e. 70400-47080 = 23,320 to be paid next year as they are cumulative.

In second year out of distributed profits of $103,720 first arrears of previous year i.e. $23,320 to be paid and then current year dividend $70,400 to be paid.Therefore total preference dividend is 23,320+70,400 = $93,720. Therefore Dividend per share in second year = 93,720/22,000 = $4.26 per share