EX 13-1 Dividends per share

Wallace Inc., a developer of radiology equipment, has stock outstanding as follows: 30,000 shares of cumulative preferred 2% stock, $90 par and 125,000 shares of $10 par common. During its first four years of operations, the following amounts were distributed as dividends:

first year, $24,000; second year, $81,000; third year, $92,000; fourth year, $139,000. Calculate the dividends per share on each class of stock for each of the four years.


Answer:

1st Year 2nd Year 3rd Year 4th Year
a. Total dividend declared…………… $24,000 $81,000 $92,000 $139,000
Preferred dividend (current)……… $24,000 $51,000* $54,000 $ 54,000
Preferred dividend in arrears……… — 30,000 3,000 —
b. Total preferred dividends………… $24,000 $81,000 $57,000 $ 54,000
Preferred shares outstanding…… ÷ 30,000 ÷ 30,000 ÷ 30,000 ÷ 30,000
Preferred dividend per share…… $ 0.80 $ 2.70 $ 1.90 $ 1.80
* $51,000 = $81,000 – $30,000
Dividend for common shares
(a. – b.)……………………………… $ — $ — $ 35,000 $ 85,000
Common shares outstanding…… ÷ 125,000 ÷ 125,000
Common dividend per share……… $ 0.28 $ 0.68