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Dividends Per Share Zero Calories Company has 15,000 shares of cumulative preferred 1% stock, $50 par and 100,000 shares of $10 par common stock. The following amounts were distributed as dividends:
20Y1 $28,500
20Y2 6,000
20Y3 110,000
Determine the dividends per share for preferred and common stock for each year. If an answer is zero, enter '0'. Round all answers to two decimal places.

Respuesta :

Answer:

(i) $0.50 per share; $0.21 per share

(ii) $0.40 per share; $0 per share

(iii) $0.60 per share; $1.01 per share

Explanation:

The Amount of Preferred Dividend:

= Number of preferred shares × Par Value × Dividend rate

= 15,000 Shares × $50 × 1%

= $7,500

In 20Y1:

Total Amount Distributed = To preferred + To common

$28,500 = $7,500 + To common

To common = $28,500 - $7,500

                    = $21,000

Preferred Dividend Per Share = Preferred dividend ÷ Number of shares

                                                  = $7,500 ÷ 15,000

                                                  = $0.50 per share

Common Dividend Per Share = common dividend ÷ Number of shares

                                                  = $21,000 ÷ 100,000

                                                  = $0.21 per share

In 20Y2:

Total Amount Distributed = To preferred + To common

To preferred = $6,000

To common = $0

Preferred Dividend Per Share = Preferred dividend ÷ Number of shares

                                                  = $6,000 ÷ 15,000

                                                  = $0.40 per share

Common Dividend Per Share = common dividend ÷ Number of shares

                                                  = $0 ÷ 100,000

                                                  = $0 per share

In 20Y3:

Total Amount Distributed = To preferred + To common

$110,000 = ($7,500 + $1,500) + To common

To common = $110,000 - $9,000

                    = $101,000

Preferred Dividend Per Share = Preferred dividend ÷ Number of shares

                                                  = $9,000 ÷ 15,000

                                                  = $0.60 per share

Common Dividend Per Share = common dividend ÷ Number of shares

                                                  = $101,000 ÷ 100,000

                                                  = $1.01 per share

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