Question

The following information applies to the questions displayed below.]
 

Year 1 total cash dividends	$	19,100
Year 2 total cash dividends		27,700
Year 3 total cash dividends		230,000
Year 4 total cash dividends		380,000

York’s outstanding stock consists of 85,000 shares of noncumulative 7.0% preferred stock with a $5 par value and also 260,000 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:

 Determine the amount of dividends paid each year to each of the two classes of stockholders: preferred and common. (Round your "Dividend per Preferred Share" answer to 3 decimal places.)

 

Answer 1

	Par Value per Preferred Share	Dividend Rate	Dividend per Preferred Share	Number of Preferred Shares	Preferred Dividend
Annual Preferred Dividend:	$5.00	7.0%	$0.350	85,000	$29,750
	Total Cash Dividend Paid	Paid to Preferred	Paid to Common	Dividends in Arrears at year-end
Year 1	$19,100	$19,100	$0	$0
Year 2	27,700	27,700	0	0
Year 3	230,000	29,750	200,250	0
Year 4	380,000	29,750	350,250	0
Total:	$656,800	$106,300	$550,500

 

 

Non-Cumulative
	Preferred				Common
Year 1 ($19,100 paid)
Preferred*		$	19,100
Common—remainder						$	0
Total for the year		$	19,100			$	0
Year 2 ($27,700 paid)
Preferred*		$	27,700
Common—remainder						$	0
Total for the year		$	27,700			$	0
Year 3 ($230,000 paid)
Preferred*		$	29,750
Common—remainder						$	200,250
Total for the year		$	29,750				200,250
Year 4 ($380,000 paid)
Preferred*		$	29,750
Common—remainder						$	350,250
Total for the year		$	29,750			$	350,250
Year 1-Year 4 ($656,800 paid)
Total for four years		$	106,300			$	550,500

 

 

 

 

*The holders of the noncumulative preferred stock are entitled to no more than $29,750 of dividends in any one year (7.0% × $5 × 85,000 shares).