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Windborn company has 20,000 shares of cumulative preferred 2% stock, $150 par and 50,000 shares of $25 par common stock. the following amounts were distributed as dividends:

20y1 $120,000
20y2 24,000
20y3 180,000
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'.

preferred stock common stock
(dividends per share) (dividends per share)

20y1
20y2
20y3

Sagot :

Parrain

Based on the preferred dividends, the dividends for preferred and common stock in each year are:

Preferred stock dividends:

  • 20y1 - $3.00 per share.
  • 20y2 - $1.20 per share.
  • 20y3 - $4.80 per share.

Common stock dividends:

  • 20y1 - $1.20 per share.
  • 20y2 - $0 per share.
  • 20y3 - $1.68 per share.

What are the preferred dividends?

Preferred shares have a specific dividend, and as these are cumulative shares, the dividends that are not paid in one year, will be paid in the next.

Dividends per year:

= 20,000 x 2% x 150

= $60,000

20y1 dividend per share:

= 60,000 / 20,000

= $3.00 per share

20y2 dividend per share:

= 24,000 / 20,000

= $1.20 per share

20y3 dividend per share:

The remaining dividend from 20y2 will have to be paid here:

= (60,000 + (60,000 - 24,000)) / 20,000

= 96,000 / 20,000

= $4.80 per share

What are the common dividends?

Preferred dividends are paid first:

Common dividends are:

= (Amount distributed as dividends - Preferred dividends) / Number of common shares

In 20y1:

= (120,000 - 60,000) / 50,000

= $1.20

In 20y2:

= (45,000 - 45,000) / 50,000

= $0 per share

In 20y3:

= (180,000 - 96,000) / 50,000

= $1.68 per share.

Find out more on preferred dividends at https://brainly.com/question/1416151.

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