International Grocer Corporation has outstanding 40,000 shares of noncumulative,

Question

International Grocer Corporation has outstanding 40,000 shares of noncumulative, 10 percent, $100 par-value preferred stock and 70,000 shares of no-par-value common stock.

During 2013, the corporation paid dividends of $360,000. What amount will be paid on each share of
preferred stock? (Omit the "$" sign in your response.)

During 2013, the corporation paid dividends of $360,000. What amount will be paid on each share of common stock? (Leave no cells blank - be certain to enter "0" wherever required. Omit the "$" sign in your response.)

  Common stock=

During 2014, the corporation paid dividends of $750,000. How much will be paid on each share of preferred stock? (Omit the "$" sign in your response.)

During 2014, the corporation paid dividends of $750,000. How much will be paid on each share of common stock? (Omit the "$" sign in your response.)

International Grocer Corporation has outstanding 40,000 shares of noncumulative, 10 percent, $100 par-value preferred stock and 70,000 shares of no-par-value common stock.

1.1

During 2013, the corporation paid dividends of $360,000. What amount will be paid on each share of
preferred stock? (Omit the "$" sign in your response.)

  Preferred stock= $  per preferred share 1.2

During 2013, the corporation paid dividends of $360,000. What amount will be paid on each share of common stock? (Leave no cells blank - be certain to enter "0" wherever required. Omit the "$" sign in your response.)

   

  Common stock=

2.1

During 2014, the corporation paid dividends of $750,000. How much will be paid on each share of preferred stock? (Omit the "$" sign in your response.)

  Preferred stock= $  per preferred share 2.2

During 2014, the corporation paid dividends of $750,000. How much will be paid on each share of common stock? (Omit the "$" sign in your response.)

  Common stock $  per common share

Explanation / Answer

1.1/

PREFERED STOCK DIVIDEND PER SHARE = $360000 / 40000 SHARES

   = $9 PER SHARE

AS THERE IS NO AVAILABE SURPLUS TO PAY 10% DIVIDEND AS PROVIDED IN THE SHARE CERTIFICATE, THE COMANY WILL PAY $9 TO EACH NON CUMULATIVE PREFERED SHARE HOLDER.

AND THE REMAINING $1 WILL ALSO NO CARRY FORWRDED TO NEXT YEAR BECAUSE IT IS NON CUMULATIVE.

1.2/

AS WE HAVE DISCUSSED ABOVE THAT THE SURPLUS AVAILABLE IS NOT SUFFICIENT TO PAY THE DIVIDEND TO THE NON CUMULATIVE SHARE HOLDER, THE COMMON STOCK HOLDER WILL GET NOTHING.

DIVIDEND TO COMMON STOCK HOLDER = 0

2.1/

DIVIDEND TO EACH PREFERED SHARE HOLDER = $100 * 10%

   = $10

2.2/

TOTAL DIVIDEND PAID = $750000

LESS DIVIDEND TO PREFERED SHARE HOLDER ($10 * 40000) = ($400000)

BALANCE DIVIDEND PAID TO COMMON STOCK HOLDERS = $350000

NO OF COMMON STOCK = 70000

DIVVIDEND PER COMMON STOCK ($350000 / 70000) = $5

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