Question

Exercise 15-23 Larkspur Company has outstanding 2,500 shares of $100 par, 6% preferred stock and 14,600...

Exercise 15-23

Larkspur Company has outstanding 2,500 shares of $100 par, 6% preferred stock and 14,600 shares of $10 par value common. The following schedule shows the amount of dividends paid out over the last 4 years.

Allocate the dividends to each type of stock under assumptions (a) and (b). Express your answers in per-share amounts using the format shown below. (Round the rate of participation to 4 decimal places, e.g.1.4278%. Round answers to 2 decimal places, e.g. $6.85.)

(a) Preferred, noncumulative,

and nonparticipating

(b) Preferred, cumulative, and

fully participating

Year Paid-out Preferred Common Preferred Common
2015 $11,900 $ $ $ $
2016 $26,200 $ $ $ $
2017 $54,000 $ $ $ $
2018 $76,600 $ $ $ $

Homework Answers

Answer #1

Allocate the dividends to each type of stock under assumptions (a) and (b). Express your answers in per-share amounts using the format shown below.

(a) Preferred, noncumulative,

and nonparticipating

(b) Preferred, cumulative, and

fully participating

Year Paid out Preferred Common Preferred Common
2015 11900 11900/2500 = 4.76 11900/2500 = 4.76
2016 26200 15000/2500 = 6.00 11200/14600 = 0.77 18100/2500=7.24 8100/14600=0.55
2017 54000 15000/2500 = 6.00 39000/14600 = 2.67 15000/2500 = 6.00 39000/14600=2.67
2018 76600 15000/2500 = 6.00 61600/14600 = 4.22 15000/2500 = 6.00 61600/14600=4.22
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