Required Information The following Information applies to the questions displaye
ID: 2590821 • Letter: R
Question
Required Information The following Information applies to the questions displayed belowj York's outstanding stock consists of 70,000 shares of noncumulative 6.0% preferred stock with a $5 par value and also 180,000 shares of common stock with a $1 par value. During its first four years of operation, the corporation declared and paid the following total cash dividends: 2015 total cash dividends 2816 total cash dividends 2017 total cash dividends 2018 total cash dividends $ 9,186 19,88e 295,80e 445, 888 Determine the amount of dividends pald each year to each of the two classes of stockholders assuming that the preferred stock is cumulative. Also determine the total dividends pald to each class for the four years comblned. (Round your "DIvldend per Preferred Share" answers to 3 decimal places.) per Number o Preferred per Preferred Share Preferred Dividend Dividend Rate Preferred Share Shares Annual Preferred Dividend Total Cash Dividend Paid Preferred Paid to Common Dividends in Arrears at year-end Paid to 2015 2016 2017 2018 Totals 9.100 19.000 295.000 445,000 768.100 SExplanation / Answer
Solution:
Cumulative preferred stock is the preferred stock with a provision that describes that if any dividend payments have been missed in the past, the dividends owed must be paid out to cumulative preferred shareholders first. Accumulated dividends are the result of dividends that are carried forward from previous periods and shareholder of cumulative preferred stock receive dividends before any other stockholders.
Par Value per Preferred Share
Dividend Rate
Dividend Per Share
Number of Preferred Shares
Preferred Dividend
Annual Preference Dividend
$5
6%
$0.30
70,000
$21,000
Total Cash Dividend Paid
Paid to Preferred
Paid to Common
Dividends in Arrears at year end
2015
$9,100
$9,100
0
$11,900
2016
$19,000
$19,000
0
$13,900
(11,900 previous year + $2000 this year)
2017
$295,000
$34,900
(Arrears $13,900 + $21,000 This is year)
$260,100
(295,000 – 34900)
$0
2018
$445,000
$21,000
$424,000
(445,000 – 21,000)
$0
Totals
$768,100
$84,000
$684,100
$0
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Par Value per Preferred Share
Dividend Rate
Dividend Per Share
Number of Preferred Shares
Preferred Dividend
Annual Preference Dividend
$5
6%
$0.30
70,000
$21,000
Total Cash Dividend Paid
Paid to Preferred
Paid to Common
Dividends in Arrears at year end
2015
$9,100
$9,100
0
$11,900
2016
$19,000
$19,000
0
$13,900
(11,900 previous year + $2000 this year)
2017
$295,000
$34,900
(Arrears $13,900 + $21,000 This is year)
$260,100
(295,000 – 34900)
$0
2018
$445,000
$21,000
$424,000
(445,000 – 21,000)
$0
Totals
$768,100
$84,000
$684,100
$0
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