Sandpiper Company has 15,000 shares of cumulative preferred 2% stock, $150 par and 50,000 shares of...

Sandpiper Company has 15,000 shares of cumulative preferred 2% stock, $150 par and 50,000 shares of $30 par common stock. The following amounts were distributed as dividends:

Year 1	$67,500
Year 2	36,000
Year 3	135,000

Determine the dividends per share for preferred and common stock for each year. Round all answers to two decimal places. If an answer is zero, enter '0'.

	Year 1	Year 2	Year 3
Preferred stock (Dividends per share)	$	$	$
Common stock (Dividends per share)	$	$	$

Expert Solution


				Interest @ 2% Per year on preferred shares
Peferred Capital = 15,000 Cumulative pref Shares of $ 150 Each =			$ 22,50,000	$ 45,000
Common Share Capital = 50,000 Shares of $ 30 =			$ 15,00,000

Cumulative means the if the preference dividend is not paid in the last year then that shoul be accumulate
in next years payment ot it will carry forward as unpaid dividend

Year	total Cash Dividend Paid (A)	Paid to Preferred Stock (B)	Paid to Common Shares (A -B)	Dividend in the arreas for 2 year	Remarks
Year1	$ 67,500.00	$ 45,000.00	$ 22,500.00	$ -	No Arreas of dividend for preference shares because pais full amount
Year2	$ 36,000.00	$ 36,000.00	$ -	$ 9,000.00	Ther eis partly paid only in preference dividend so there is arreas of $ 9000
Year3	$ 1,35,000.00	$ 54,000.00	$ 81,000.00	$ -	Preference Dividend = $ 45000 current dividend + $ 9000 arrears


Dividend per share = Dividend/ Total outstanding shares

		Preferred	Common
Total Outstanding shares =		15000	50000
Dividend per share for Year 1=		$ 3.00	$ 0.45
Dividend per share for Year 2=		$ 2.40	$ -
Dividend per share for Year 3 =		$ 3.60	$ 1.62

ekkarill92 answered 3 years ago

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