CengageNowv2 1 Online teaching and learning resource from Cengrge.. Has 40,000 h

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CengageNowv2 1 Online teaching and learning resource from Cengrge.. Has 40,000 h 12-W2 Dividends eBook Show Me How Calculator Print Item Dividends Per Share Sandpiper Company has 30,000 shares Year 1 Year 2 Year 3 Determine the dividends per share for preferred and common stock for each year. Round all of cumulative preferred 1% stock, $50 par and 50,000 shares of $10 par common stock. The following amounts were distributed as dividends: $37,500 7,500 45,000 answers to two decimal places. If an answer is zero, enter 'o. Preferred Stock (dividends per share) Common Stock (dividends per share) Year 1 Year 2 Year 3 0.45 0.57 x o.9 X Check My Determine what amount of current dividends that preferred stock should receive per year Keep in mind that the question is asking for a Learning Objective 2 s asking for a dvidend per share for each year and class of stock, rather than the total amount to be distributed to each class of stock

Explanation / Answer

Cumulative means the if the preference dividend is not paid in the last year then that shoul be accumulate in next years payment ot it will carry forward as unpaid dividend Year total Cash Dividend Paid (A) Paid to Preferred Stock (B) Paid to Common Shares (A -B) Dividend in the arreas for 2 year Remarks Year1 $               37,500.00 $                                     15,000.00 $           22,500.00 $                          -   No Arreas of dividend for preference shares because pais full amount Year2 $                  7,500.00 $                                       7,500.00 $                          -   $             7,500.00 Ther eis partly paid only in preference dividend so there is arreas of $ 7,500 Year3 $               45,000.00 $                                     22,500.00 $           22,500.00 $                          -   Preference Dividend = $ 15,000 current dividend + $ 7,500 arrears Total Outstanding shares = 30000 50000 Dividend per share for Year 1= $                                               0.50 $                     0.45 Dividend per share for Year 2= $                                               0.25 $                          -   Dividend per share for Year 3 = $                                               0.75 $                     0.45 Dividend per share = Dividend/ Total outstanding shares WORKING NOTE: Calculation of preferred stock dividend payable per year No. of Shareholders Par Value per shares Value of the preferred shares Value of the preferred stock = 30000 $                         50 $           15,00,000 Dividend payable per year is 1% = $                 15,000

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