Question

Oceanic Company has 10,000 shares of cumulative preferred 2% stock, $50 par and 50,000 shares of $10 par common stock. The following amounts were distributed as dividends: Year 1 $20,000 Year 2 4,000 Year 3 30,000 I need to find the preferred dividend per share and common dividend per share for years 1, 2, & 3?

Answer 1

			Dividend Payout
	Quantity	Par Value	Year 1	Year 2	Year 3	Calculation
2 % Cumulative preference Shares	10,000	$50.00	$     10,000	$      4,000	$     16,000	Standard Dividend - $10,000 ($50 x 10,000 x 2%). In Year 2, total divided paid was only $4,000. So it is assumed it was fully paid to Preference shareholders. In Year 3, cumulative divided accrued from previous year paid along with current year dividend of $10,000.
Common stock	50,000	$10.00	$     10,000	$           -	$     14,000	Difference
			$     20,000	$      4,000	$     30,000	Given