Question

Raphael Corporation’s common stock is currently selling on a stock exchange at $192 per share, and its current balance sheet shows the following stockholders’ equity section:

Preferred stock—5% cumulative, $___ par value, 1,000 shares authorized, issued, and outstanding	$	70,000
Common stock—$___ par value, 4,000 shares authorized, issued, and outstanding		180,000
Retained earnings		340,000
Total stockholders' equity	$	590,000

Problem 11-5A Part 5

5.1 If two years’ preferred dividends are in arrears and the board of directors declares cash dividends of $16,500, what total amount will be paid to the preferred and to the common shareholders?

5.2 What is the amount of dividends per share for the common stock? (Round your answer to two decimal places.)

Answer 1

	Prefference dividend per year(70000*5%)				=	3500
	Prefference Dividend Arrears(3500*2)				=	7000
	Current year Prefference dividend				=	3500
		Total Prefference dividends				10500
	Total dividend declared current year					16500
(a)	Dividends distributable to common stock holders					6000
	Dividends distributable to preference stock holders					10500
(b)	Dividend per share of common stock
	Common stock shares			4000
	Common stock dividend			6000
	Dividend per share (6000/4000)			1.5