Weston Company issued and has outstanding 114,000 shares of $10 par-value common

Question

Weston Company issued and has outstanding 114,000 shares of $10 par-value common stock and 3,000 shares of $50 par-value 25 percent preferred stock. The board of directors votes to distribute $7,500 as dividends in 2019, $10,500 in 2020, and $254,100 in 2021.

Compute the total dividend and the dividend for each share paid to preferred stockholders and common stockholders each year under the following assumed situations.

Case B: The preferred stock is cumulative and nonparticipating.

Analyze:
If a stockholder purchased 350 shares of cumulative preferred stock in 2019, what total dividends should be paid to this stockholder in the fiscal year 2021, assuming Case B?

Compute the total dividend and the dividend for each share paid to preferred stockholders and common stockholders each year under the above assumed situations. (Round your pershare answers to 2 decimal places.)

ANALYZE:

If a stockholder purchased 350 shares of cumulative preferred stock in 2019, what total dividends should be paid to this stockholder in the fiscal year 2021, assuming Case B?

Explanation / Answer

Annual preferred dividends = 3000*50*25%= $37500 Case B Year Total Dividends Preferred Stock Common Stock Total Per Share Total Per Share 2019 $7,500 $7,500 $2.50 $0 $0.00 2020 10,500 10,500 $3.50 0 0 2021 254,100 94500 $31.50 159,600 1.4 2 Dividend paid to stockholder in 2021 = 350*31.5= $11025 Calculation: Preferred stock dividend in 2021 = (37500*3)-7500-10500= $94500

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