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s Tools Help CengageNOW2 | Online teaci X C Windbom Company Has 30 Sandpiper Com

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Question

s Tools Help CengageNOW2 | Online teaci X C Windbom Company Has 30 Sandpiper Company " Cengage Cengage Learning a https/v2.cengagenow.com/flm/takeAssignment/takeAssignmentMain.do?invoke-Search Dividends Per Share Sandpiper Company has 25,000 shares of cumulative preferred 2% stok, $150 par and 50,000 shares of $30 par common stock. The following amounts were distributed as dividends Year 1 Year 2 Year 3 $112,500 60,000 225,000 Determine the dividends per share for preferred and common steck for each year. Round all answers to two decimal places. If an answer is zero, enter Preferred Stock Common Stock (dividends per share) (dividends per share) Year 1 Year 2 Year 3 SuunitAnswer

Explanation / Answer

Number of 2% cumulative preferred stock( face value $150)= 25000

Number of common shares ($30 par value)= 50000

Annual dividend payable to Preference shareholders= 25000*150*2% = $75000

Dividend payment schedule:

Year

Total dividend($)

Payable to preference shareholders($)

Payable to common shareholders($)

1

112,500

75,000

37,500

2

60,000

60,000

0

3

225,000

90,000***

135,000

*** Since the preference shares are cumulative preference shares, the dividend get accumulated if it is not paid in a particular year and will be paid in the year of sufficient profit before paying any dividend to common shareholders. In second year there is only a dividend of $60,000. But dividend payable to Preference shareholders is $75000. Due to deficiency of fund only $60,000 will be paid in year2 and balance $15000 will be paid in third year.

Dividend per share = Dividend amount/ No. of shares

Year

Preferred stock

(Dividend per share)

Common stock

(Dividend per share)

1

75000/25000= $3

37500/50000= $ 0.75

2

60000/25000 = $2.40

0

3

90000/25000= $3.60

135000/50000= $2.70

Year

Total dividend($)

Payable to preference shareholders($)

Payable to common shareholders($)

1

112,500

75,000

37,500

2

60,000

60,000

0

3

225,000

90,000***

135,000