Question

Dividends Per Share

Seventy-Two Inc., a developer of radiology equipment, has Shares of ownership of a corporation.stock outstanding as follows: 70,000 shares of cumulative preferred 3% stock, $20 A dollar amount assigned to each share of stock.par, and 410,000 shares of $25 par common.

During its first four years of operations, the following amounts were distributed as dividends: first year, $31,000; second year, $76,000; third year, $100,000; fourth year, $110,000.

Calculate the dividends per share on each class of stock for each of the four years. Round all answers to two decimal places. If no dividends are paid in a given year, enter "0.00".

	1st Year	2nd Year	3rd Year	4th Year
A class of stock with preferential rights over common stock.Preferred stock (dividends per share)	$	$	$	$
The stock outstanding when a corporation has issued only one class of stock.Common stock (dividends per share)	$	$	$	$

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Answer 1

	Particulars			No. Of Shares	Par Value	Total
	3% Preference Shares			70000	20	1400000
	Common Shares			410000	25	10250000
	First Year
a.	Pref Dividend = 3% of 1400000 =			42000
b.	Dividend Distributed =			31000
(a-b)	Dividends in Arrears			11000
	Dividend Distributed =			0.44	$	31000 /70000
	Second Year
a.	Pref Dividend = 3% of 1400000 =			42000
b.	Cumm. Dividend in Arrears Year1			11000
a+b = c	Total Pref. Dividend			53000
d.	Dividend Distributed =			76000
d-c	Surplus Left for Common Stock			23000
	Dividend for Pref Stock			0.757	$	53000/70000
	Dividend for Common Stock			0.056	$	23000/410000
	Third Year
a.	Pref Dividend = 3% of 1400000 =			42000
b.	Dividend Distributed =			100000
b-a	Surplus Left for Common Stock			58000
	Dividend for Pref Stock			0.6	$	42000/70000
	Dividend for Common Stock			0.141	$	58000/410000
	Fourth Year
a.	Pref Dividend = 3% of 1400000 =			42000
b.	Dividend Distributed =			110000
b-a	Surplus Left for Common Stock			68000
	Dividend for Pref Stock			0.6	$	42000/70000
	Dividend for Common Stock			0.166	$	68000/410000
	A class of stock with preferential rights over common stock.Preferred stock (dividends per share)				1st Year	2nd year	3rd Year	4th Year
	Preference Share				0.44$	0.757$	0.6$	0.6$
	Common Stock				0.00$	0.056$	0.141$	0.166$
	The stock outstanding when a corporation has issued only one class of stock.Common stock (dividends per share)				1st Year	2nd year	3rd Year	4th Year
	Common Stock (in $)				0.076	0.185	0.244	0.268
	Calculation:				31000/410000	76000/410000	100000/410000	110000/410000