Pecan Theatre Inc. owns and operates movie theaters throughout Florida and Georg
ID: 2430734 • Letter: P
Question
Pecan Theatre Inc. owns and operates movie theaters throughout Florida and Georgia. Pecan Theatre has declared the following annual dividends over a six-year period: Year 1, $16,000; Year 2, $32,000; Year 3, $112,000; Year 4, $122,000; Year 5, $134,000; and Year 6, $148,000. During the entire period ended December 31 of each year, the outstanding stock of the company was composed of 20,000 shares of cumulative preferred 2% stock, $100 par, and 100,000 shares of common stock, $20 par. Required: 1. Determine 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 at the beginning of Year 1. Summarize the data in tabular form. Note: If required, round your answers to two decimal places. If the amount is zero, enter "0".
Explanation / Answer
Answer
There are Cumulative preference shares, so we will pay them first and if that dividend is not sufficient to pay the required share of Cumulative preference shareholders then their remaining Unpaid dividend will be carried forward to the next year till it is paid.
Preference Shareholder’s dividend = 20,000 Shares * $100 * 2%
Preference Shareholder’s dividend = $40,000
Year
Total Dividend
Pref. Dividend paid
Pref. per share
Pref. Dividend Remaining
Equity Dividend
Equity Per share
1
16,000.00
16,000.00
0.08
24,000.00
-
-
2
32,000.00
32,000.00
0.16
32,000.00
(24,000 + 8,000)
-
-
3
112,000.00
72,000.00
(40,000 + 32,000)
0.36
-
40,000.00
0.40
4
122,000.00
40,000.00
0.20
-
82,000.00
0.82
5
134,000.00
40,000.00
0.20
-
94,000.00
0.94
6
148,000.00
40,000.00
0.20
-
108,000.00
1.08
Year
Total Dividend
Pref. Dividend paid
Pref. per share
Pref. Dividend Remaining
Equity Dividend
Equity Per share
1
16,000.00
16,000.00
0.08
24,000.00
-
-
2
32,000.00
32,000.00
0.16
32,000.00
(24,000 + 8,000)
-
-
3
112,000.00
72,000.00
(40,000 + 32,000)
0.36
-
40,000.00
0.40
4
122,000.00
40,000.00
0.20
-
82,000.00
0.82
5
134,000.00
40,000.00
0.20
-
94,000.00
0.94
6
148,000.00
40,000.00
0.20
-
108,000.00
1.08
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