In: Accounting
Lightfoot Inc., a software development firm, has stock outstanding as follows: 15,000 shares of cumulative preferred 4% stock, $20 par, and 19,000 shares of $75 par common. During its first four years of operations, the following amounts were distributed as dividends: first year, $4,500; second year, $7,500; third year, $41,480; fourth year, $71,470. 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".
Preferred stock (dividend per share)
Common stock (dividend per share)
Preferred stock (dividend per share)
Year -1 = $0.30 per share
Year -2 = $0.50 per share
Year -3 = $1.60 per share
Year -4 = $0.80 per share
Common stock (dividend per share)
Year -1 = $0.00 per share
Year -2 = $0.00 per share
Year -3 = $0.92 per share
Year -4 = $3.13 per share
WORKINGS
Preferred Dividend payable = 12,000 x $20.00 x 4.00%
= $12,000
Year-1
To preferred shareholders = $4,500
To Common shareholders = $0
Preferred Dividend arrear = $7,500
Preferred dividend per share = $0.30 per share [$4,500 / 15,000 shares]
Common dividend per share = $0.00
Year-2
To preferred shareholders = $7,500
To Common shareholders = $0
Preferred Dividend arrear = $4,500
Preferred dividend per share = $0.50 per share [$7,500 / 15,000 shares]
Common dividend per share = $0.00
Year-3
To preferred shareholders = $24,000 [$12,000 + $7,500 + $4,500]
To Common shareholders = $17,480 [$41,480 - $24,000]
Preferred dividend per share = $1.60 per share [$24,000 / 15,000 shares]
Common dividend per share = $0.92 per share [$17,480 / 19,000 shares]
Year-4
To preferred shareholders = $12,000
To Common shareholders = $59,470 [$71,470 - $12,000]
Preferred dividend per share = $0.80 per share [$12,000 / 15,000 shares]
Common dividend per share = $3.13 per share [$59,470 / 19,000 shares]