I THINK I HAVE THIS PROBLEM FIGURED OUT, EXCEPT THE ARREARS COLUMN. THANKS FOR Y
ID: 2348000 • Letter: I
Question
I THINK I HAVE THIS PROBLEM FIGURED OUT, EXCEPT THE ARREARS COLUMN. THANKS FOR YOUR TIMEJohn Dear Co. is a heavy equipment and lawn care products manufacturer located in Illinois. John Dear is publicly owned, and has declared the following dividends over a six year period:
20X1, $ 760,000; 20X2, $ 1,250,000; 20X3, $ 0; 20X4, $ 3,020,000; 20X5, $ 120,000; and 20X6, $ 1,000,000. During the entire period, the outstanding stock of the company was composed of 600,000 shares of cumulative, nonparticipating 2%, $20 Par Preferred stock and 2,000,000 shares of common stock, $ 5 par.
Calculate the total dividends and the per-share dividends declared on each class of stock for each of the six years. There were no dividends in arrears on Jan. 1, 20X1.
Round to the nearest cent.
Preferred Dividends Common Dividends
Year Total Dividends Total Per Share Arrears Total Per Share
20X1 760,000 240,000 .40 520,000 .26
20X2 1,250,000 240,000 .40 1,010,000 .51
20X3 0 0 0 0 0
20X4 3,020,000 480,000 .80 2,540,000 1.27
20X5 120,000 120,000 .20 0 0
20X6 1,000,000 360,000 .40 640,000 .32
Explanation / Answer
put your own values 1) 10,000 x 2% x 100 = $20,000 dividends owed to preferred shareholders each year 2005 5,000 Preferred Total $5,000 5,000 / 10,000 = $0.50 per share, $15,000 dividends is in arrears Common 0 2006 18,000 Preferred Total $18,000 18,000 / 10,000 = $1.80 per share. There is now $17,000 dividends in arrears Common 0 2007 45,000 Preferred Total $37,000 37,000 / 10,000 = $3.70 per share. There are now 0 dividends in arrears Common Total $8,000 8,000 / 25,000 = $0.32 per share 2008 45,000 Preferred Total $20,000 20,000 / 10,000 = $2 per share Common Total $25,000 25,000 / 25,000 = $1 per share 2009 60,000 Preferred Total $20,000 20,000 / 10,000 = $2 per share Common Total $40,000 40,000 / 25,000 = $1.60 per share 2010 67,000 Preferred Total $20,000 20,000 / 10,000 = $2 per share Common Total $47,000 47,000 / 25,000 = $1.88 per share 2. Determine the average annual dividend per share for each class of stock for the six year period. Since there are no preferred dividends in arrears at the end of the six year period, annual dividend per share for preferred stock is $2.00 per share, the same amount they are owed every year. For common share holders, first add up total dividends paid to them. 8,000 + 25,000 + 40,000 + 47,000 = 120,000 There were 25,000 shares outstanding each year and there were six years. 6.x 25,000 = 150,000. 120,000 / 150,000 = $0.80 average annual dividend per share for common stock.
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