Question

Lasson Corp. has 5,000 preferred shares outstanding ($2 dividend), which were issued for $150,000, and 30,000 common shares, which were issued for $550,000.

Instructions

The following schedule shows the amount of dividends paid out over the past four years. Allocate the dividends to each type of share under assumptions (a) and (b). Express your answers in per share amounts and using the format that is shown. Round amounts to the nearest cent.

		Assumptions
		(a) Preferred, non-cumulative, and non-participating		(b) Preferred, cumulative, and fully participating
Year	Paid-out	Preferred	Common	Preferred	Common
2014	$  8,000
2015	$ 24,000
2016	$ 60,000
2017	$126,000

Answer 1

		Preferred non - cumulative and non - participating		Preferred cumulative and fully participating
		(i) / 5000	(ii) / 30000	(iii) / 5000	(iv) / 30000
	Paid - out	Preferred per share	Common per share	Preferred per share	Common per share
2014	$       8,000	$               1.60	0	$              1.60	0
2015	$     24,000	$               2.00	$         0.47	$              2.40	$              0.40
2016	$     60,000	$               2.00	$         1.67	$              2.00	$              1.67
2017	$ 1,26,000	$               2.00	$         3.87	$              2.00	$              3.87
Workings:
		Preferred non - cumulative and non - participating		Preferred cumulative and fully participating
		(i)	(ii)	(iii)	(iv)
	Paid - out	Preferred Stock	Common Stock	Preferred Stock	Common Stock
2014	$       8,000	$             8,000	0	$            8,000	0
2015	$     24,000	$           10,000	$    14,000	$         12,000	$         12,000
2016	$     60,000	$           10,000	$    50,000	$         10,000	$         50,000
2017	$ 1,26,000	$           10,000	$ 1,16,000	$         10,000	$      1,16,000
Preferred Dividend	=	5000 X $2
	=	$           10,000