Fairmount Inc., a developer of radiology equipment, has stock outstanding as fol

Question

Fairmount Inc., a developer of radiology equipment, has stock outstanding as follows: 24,000 shares of cumulative preferred 1% stock, $110 par, and 80,000 shares of $5 par common. During its first four years of operations, the following amounts were distributed as dividends: first year, $17,760; second year, $24,480; third year, $70,560; fourth year, $120,000. Calculate the dividends per share on each class of stock for each of the four years. Round all answers to two decimal places. If no dividends are paid in a given year, enter "0".

Preferred stock (dividend per share) $ $ $ $ Common stock (dividend per share) $ $ $ $

Explanation / Answer

Answer: Preferred dividend=24000*$110*1%=$26400

Particulars 1st year 2nd year 3rd Year 4th Year Preferred stock (dividend per share) 17760 15840 26400 26400 Arrear Preferred dividend paid 0 8640 10560 Common stock (dividend per share) 0 0 33600 93600 Total 17760 24480 70560 120000 Arrear dividend (26400-17760) 8640 Arrear dividend (26400-15840) 10560

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