Question

Lightfoot Inc., a software development firm, has stock outstanding as follows: 30,000 shares of cumulative preferred 4% stock, $25 par, and 38,000 shares of $50 par common. During its first four years of operations, the following amounts were distributed as dividends: first year, $11,400; second year, $18,900; third year, $88,580; fourth year, $128,040. 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

	1st year	2nd year	3rd year	4th year
Preferred Dividend per share	$                         0.38	$                    0.63	$                   1.99	$                   1.00
Common Stock per share	$                              -	$                         -	$                   0.76	$                   2.58

• 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	30,000	$            30,000.00
	Total Cash Dividend paid	Paid to Preferred	Paid to Common	Dividends in Arrears at Year end
Year 1	$            11,400.00	$           11,400.00	$                          -	$          18,600.00
Year 2	$            18,900.00	$           18,900.00	$                          -	$          29,700.00
Year 3	$            88,580.00	$           59,700.00	$           28,880.00	$                          -
Year 4	$          128,040.00	$           30,000.00	$           98,040.00	$                          -
TOTAL	$          246,920.00	$        120,000.00	$        126,920.00	$                          -

	1st year	2nd year	3rd year	4th year
Preferred Dividend:
Total	$              11,400.00	$          18,900.00	$         59,700.00	$        30,000.00
Dividend per share	$                         0.38	$                    0.63	$                   1.99	$                   1.00
Common Stock Dividend:
Total	$                              -	$                         -	$         28,880.00	$        98,040.00
Dividend per share	$                              -	$                         -	$                   0.76	$                   2.58