2102 a Determine the earnings per share in Year 2 and Year 1

$2,102 a. Determine the earnings per share in Year 2 and Year 1 for each company. tou b. Evaluate the relative profitability of the two companies. $3,695 Year 1 3,162 the nearest cent. $1,940- 599 363 Round to ms: Series A PR 13-1A Dividends on preferred and common stock Pecan Theatre Inc. owns and Year 6, $180. ing stock of the company stock, $20 par, and 500,000 shares of ia. Pecan Theatre has declared the follo r 6, $180,000. During th operates movie theaters throughout Florida and Year 3, $150,000, Year 4, $150,000, Year 5, $160,000, and e entire period ended December 31 of each year, the outstand- D, wing annual dividends over a six-year period was composed of 250,000 shares of cumulative, preferred 2% common stock, $15 par. Instructions 1. Determine the total dividends and the per-share dividends declared on each class of stock for each of the six years. There were no dividends in arrears at the beginning of Year 1. Summarize the data in tabular form, using the following column headings: Preferred Dividends Common Dividends Total Per Share Total Per Share Total Year Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Dividends 80,000 90,000 150,000 150,000 160,000 180,000 2. Determine the average annual dividend per share for each class of stock for the six- year period the common stock, determine the average annual percentage return on initial share- holders\' investment, based on the average annual dividend per share (a) for preferred stock and (b) for common stock. 3. Assuming a market price per share of $25.00 for the preferred stock and $17.50 for OBJ.3 PR 13-2A Stock transactions for corporate expansion On December 1 of the current year, the following accounts and their balances appear in the ledger of Latte Corp., a coffee processor 4,000,000 560,000 Preferred 296 Stock, $50 par (250,000 shares authorized 80,000 shares issued) Paid-In Capital in Excess of Par-Preferred Stock Common Stock, $35 par (1,000,000 shares authorized 14,000,000 1,200,000

Solution

Required : Part 2) The average annual dividend per share for each class of stock :

	Y1	Y2	Y3	Y4	Y5	Y6
Total dividend paid	$80000	90000	150000	150000	160000	180000
Less: Preferred dividend ($20*2%*250000=100000)	100000	100000	100000+30000 =130000	100000	100000	100000
Carry forward	-20000	-10000	20000	50000	60000	80000
Less: Cash dividend to CS	nil	nil	20000	50000	60000	80000
Average dividend per Pref. share(total shares 250000)	80000/250000=$0.32 per share	$0.36 per share	130000/250000=$0.52 per share	$0.40 per share	$0.40 per share	$0.40 per share
Average dividend per CS share(total shares 500000)	NA	NA	20000/500000 = $0.04 per share	$0.10 per share	$0.12 per share	$0.16 per share