Cash Dividends on Preferred and Common Stock Ex-Act Corporation pays dividends a

Question

Cash Dividends on Preferred and Common Stock

Ex-Act Corporation pays dividends at the end of each year. The dividends that it paid for 2012, 2013, and 2014 were $160,000, $120,000, and $360,000, respectively.

1. Calculate the total amount of dividends Ex-Act paid in each of these years to its common and preferred stockholders under the following capital structure: 40,000 shares of $100 par, 6 percent noncumulative preferred stock and 120,000 shares of $10 par common stock. Ex-Act had no dividends in arrears at the beginning of 2012. If an amount is zero, enter "0".

2. Calculate the total amount of dividends Ex-Act paid in each of these years to its common and preferred stockholders under the following capital structure: 20,000 shares of $100 par, 7 percent cumulative preferred stock and 120,000 shares of $10 par common stock. Ex-Act had no dividends in arrears at the beginning of 2012. If an amount is zero, enter "0".

Preferred Stock Dividends Common Stock Dividends Total 2012 $   $   $   2013 $   $   $   2014 $   $   $  

Explanation / Answer

1) Dividend distribution :

Annual preferrred dividend = 40000*100*6% = 240000

2) Dividend distribution :

Annual preferrred dividend = 20000*100*7% = 140000

Preferred Stock Dividends Common Stock Dividends Total 2012 160000 0 160000 2013 120000 0 120000 2014 240000 120000 360000

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