Question

Imaging Inc., a developer of radiology equipment, has stock outstanding as follows: 15,000 shares of cumulative preferred 2% stock, $140 par, and 50,000 shares of $25 par common. During its first four years of operations, the following amounts were distributed as dividends: first year, $28,200; second year, $65,800; third year, $83,300; fourth year, $110,000.

Compute 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

	1st year	2nd year	3rd year	4th year
Preferred Dividend:
Dividend per share	$                         1.88	$                    3.72	$                   2.80	$                   2.80
Common Stock Dividend:
Dividend per share	$                              -	$                    0.20	$                   0.83	$                   1.36

• Working

	Par Value per Preferred Share	Dividend rate	Dividend per Preferred Share	No. of Preferred Shares	Preferred Dividend
Annual Preferred Dividend:	$                        140	2.00%	$                   2.800	15,000	$            42,000.00
	Total Cash Dividend paid	Paid to Preferred	Paid to Common	Dividends in Arrears at Year end
Year 1	$            28,200.00	$           28,200.00	$                          -	$          13,800.00
Year 2	$            65,800.00	$           55,800.00	$           10,000.00	$                          -
Year 3	$            83,300.00	$           42,000.00	$           41,300.00	$                          -
Year 4	$          110,000.00	$           42,000.00	$           68,000.00	$                          -
TOTAL	$          287,300.00	$        168,000.00	$        119,300.00	$                          -

	1st year	2nd year	3rd year	4th year
Preferred Dividend:
Total	$              28,200.00	$          55,800.00	$         42,000.00	$        42,000.00
Dividend per share = Total / 15000 shares	$                         1.88	$                    3.72	$                   2.80	$                   2.80
Common Stock Dividend:
Total	$                              -	$          10,000.00	$         41,300.00	$        68,000.00
Dividend per share = Total / 50000 shares	$                              -	$                    0.20	$                   0.83	$                   1.36