Question

Zero Calories Company has 15,000 shares of cumulative preferred 1% stock, $50 par and 100,000 shares of $10 par common stock. The following amounts were distributed as dividends: 20Y1 $28,500 20Y2 6,000 20Y3 110,000 Determine the dividends per share for preferred and common stock for each year. If an answer is zero, enter '0'. Round all answers to two decimal places.

Answer 1

Distribution of Preferred Dividend and Common Dividend

	20Y1	20Y2	20Y3
Total Amount Distributed	$28,500	$6,000	$1,10,000
To Preferred	$7,500	$6,000	$9,000
To Common	$21,000	$0	$1,01,000
TOTAL	$28,500	$6,000	$1,10,000

The Amount of Preferred Dividend = Number of preferred shares x Par Value x Dividend rate

= 15,000 Shares x $50 x 1%

= $7,500

The dividends per share for preferred and common stock for each year

  

Preferred Dividend Per Share

	20Y1	20Y2	20Y3
Preferred Dividend	$7,500	$6,000	$9,000
Number of share	15,000	15,000	15,000
Dividend Per Share	$0.50 per share	$0.40 per share	0.60 per share

Common Dividend Per Share

	20Y1	20Y2	20Y3
Common Dividend	$21,000	$0	$1,01,000
Number of share	100,000	100,000	100,000
Dividend Per Share	$0.21 per share	$0 per share	$1.01 per share