Lasers4U Company has 10,000 shares of 2% comulative preferred stock of $50 par a

Question

Lasers4U Company has 10,000 shares of 2% comulative preferred stock of $50 par and 25,000 shares of $100 par common stock. The following amounts were distributed as dividends are as in first line in chart below:


Determining the dividends per share for preferred and common stock for each year. I need help with trying to figure this out. Keep getting wrong anwers when I do sample exercises.

Year 1 Year 2 Year 3 Amount distributed
$   18,000 $    7,500 $        35,000 Preferred dividend (10,000 shares)


Common dividend (25,000 shares)









Dividends per share:



Preferred stock



Common stock

Explanation / Answer

First right on dividend is of pref shareholders. Pref div = 2%*$50*10000= $10,000 Pref Div per share = 2%*$50 = $1 per share ......Ans (1) Remaining $8000 is distribueed among Common stock shareholders. So Div per share of common stock = DIvidne/No of shares = 8000/25000 = $0.32 per share...............Ans (2)

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