PROBLEM I: 25 POINTS Dick\'s outstanding stock consists of 40,000 shares of cumu

Question

PROBLEM I: 25 POINTS Dick's outstanding stock consists of 40,000 shares of cumulative 4% preferred stock with a S10 par value and also 100,000 shares of common stock with a $1 par value (SHOW ALL WORK REQUIRED: Determine the amount of dividends paid each year to each of the two classes of stock: prefered and common. Also compute the per share dividend paid each year to each of the two classes of stock YEAR DIVIDENDS PREFERRED STOCK COMMON STOCK TOTAL PER SHARE TOTAL PER SHARE 2014 $ 10,000 2015 $ 14,000 2016 $100,000 2017 $175,000

Explanation / Answer

Answer

The amount of dividends paid each year to each of the two classes of stockholders.

1.Total Preferred Stock per year =40000*10*4% = $16000

2.Preferred stock holders have right over dividend first

3.Preferred stock is cumulative hence, dividend in arrears given first to Preferred stock holders.

Year Dividend Preferred stock dividend Per share Common Stock dividend Per share 2014 $10000 $10000 0.25 Nil Nil 2015 $14000 $14000 0.35 Nil Nil 2016 $100000 $6000+$2000+$16000 =$24000 0.60 $76000 0.76 2017 $175000 $16000 0.40 $159000 1.59 Total 299000 $64000 $235000

Related Questions

Navigate

• Browse (All)
• Browse P
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.