Question

Lightfoot Inc., a software development firm, has stock outstanding as follows: 15,000 shares of cumulative preferred 4% stock, $25 par, and 19,000 shares of $50 par common. During its first four years of operations, the following amounts were distributed as dividends: first year, $5,700; second year, $9,450; third year, $44,860; fourth year, $66,110.

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".

	1st Year	2nd Year	3rd Year	4th Year
Preferred stock (dividend per share)	$	$	$	$
Common stock (dividend per share)	$	$	$	$

Answer 1

• All working forms part of the answer
• Workings

	Par Value per Preferred Share	Dividend rate	Dividend per Preferred Share	No. of Preferred Shares	Preferred Dividend
Annual Preferred Dividend:	$                          25	4.00%	$                   1.000	15,000	$            15,000.00

	Total Cash Dividend paid	Paid to Preferred	Paid to Common	Dividends in Arrears at Year end
Year 1	$              5,700.00	$             5,700.00	$                          -	$             9,300.00
Year 2	$              9,450.00	$             9,450.00	$                          -	$          14,850.00 [9300 + (15000-9450)]
Year 3	$            44,860.00	$           29,850.00 [14850 + 15000]	$           15,010.00	$                          -
Year 4	$            66,110.00	$           15,000.00	$           51,110.00	$                          -
TOTAL	$          126,120.00	$           60,000.00	$           66,120.00	$                          -

• Answers

		1st year	2nd year	3rd year	4th year
	Preferred Dividend:
A [calculated above]	Total	$                 5,700.00	$            9,450.00	$         29,850.00	$        15,000.00
B = A/ 15000 shares	Dividend per share [ANSWER]	$                         0.38	$                    0.63	$                   1.99	$                   1.00
	Common Stock Dividend:
C [calculated above]	Total	$                              -	$                         -	$         15,010.00	$        51,110.00
D = C/19000 shares	Dividend per share [ANSWER]	$                              -	$                         -	$                   0.79	$                   2.69