PE 13-1B Dividends per share

Zero Calories Company has 16,000 shares of cumulative preferred 1% stock, $40 par and 80,000 shares of $150 par common stock. The following amounts were distributed as dividends:

Year 1 $ 21,600
Year 2 4,000
Year 3 100,800

Determine the dividends per share for preferred and common stock for each year.


Answer:

Year 1 Year 2 Year 3
Amount distributed……………………………… $21,600 $4,000 $100,800
Preferred dividend (16,000 shares)…………… 6,400 4,000 8,800*
Common dividend (80,000 shares)…………… $15,200 $ 0 $ 92,000
* $2,400 + $6,400
Dividends per share:
Preferred stock………………………………… $0.40 $0.25 $0.55
Common stock………………………………… $0.19 None $1.15