Dividends Per Share windbom Company has 10000 shares of divi

Dividends Per Share windbom Company has 10,000 shares of dividends: Year 1 Year 2 Year 3 Determine the dividends per share for preferred and common stock for each year. Round all answers to two decimal places. if an answer is zero, enter 0. cumulative preferred 1% stock, $50 par and 50,000 shares of $30 par common stock. The following amounts were distributed as $10,000 4,000 15,000 Preferred Stock Common Stock (dividend per share) (dividend per share) 0.1 Year 1 Year 2 Year 3 0.50 0.40 0.60 Feedback

Solution

Answer:

Year

Per share
preferred
dividend

Per share
common
dividend

Year-1

0.5

0.1

Year-2

0.4

0

Year-3

0.6

0.18

Working notes for the above answer is as under

Here it was given in the question that preferred share are cumulative so if any year divend is not paid or less paid then remaining dividend are paid first to this share holder when company has enough income

year preferred stock dividend

=$50*1%

=0.50 per share

Total Dividend

= 10,000 * 50*1%

= $5000 each year.

If not paid in full each year, the unpaid amount carries over and is added to the amount due the following year BEFORE the common shareholders receive any dividends.

Year

Dividend

Preferred
dividend

Per share
preferred
dividend

Remaining
to common
stock

Per share
common
dividend

Year-1

10,000

5000

0.5

5,000

0.1

Year-2

4000

4000

0.4

0

0

Year-3

15,000

6000

0.6

9,000

0.18

Note:

: Preferred Stock comes first and must get $5000 of dividends each year. If there is excess it goes to the Common Stock holders. If there isn\'t enough dividends then the difference comes out of the next year.

2

Preferred Stock (dividend per share):
Year 1 $5,000 / 10,000 = $0.5
Year 2 $4,000 / 10,000 = $0.40
Year 3 $6,000 / 10,000 = $0.60

Common Stock (dividend per share):
Year 1 $5000 / 50,000 = $1
Year 2 $0 / 50,000 = $0.00
Year 3 $9,000 / 50,000 = $0.18

Year	Per share preferred dividend	Per share common dividend
Year-1	0.5	0.1
Year-2	0.4	0
Year-3	0.6	0.18