Question

Imaging Inc., a developer of radiology equipment, has stock outstanding as follows: 12,000 shares of cumulative preferred 1% stock, $140 par, and 40,000 shares of $20 par common. During its first four years of operations, the following amounts were distributed as dividends: first year, $11,280; second year, $32,320; third year, $43,520; fourth year, $72,400.

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".

Answer 1

Solution

	1st Year	2nd Year	3rd Year	4th Year
Preferred stock	$                    0.94	$                  1.86	$                  1.40	$                      1.40
Common stock	$                         -	$                  0.25	$                  0.67	$                      1.39

Working

	Par Value per Preferred share	Dividend rate	Dividend per preffred share	Number of preffered shares	Preffered Dividend
Annual Prefrred Dividend:	140	1.00%	$               1.400	12000	$           16,800.00
Year	Total Cash dividend Paid	Paid to Preferred	Paid to common	Dividends in arear at year-end
1	$         11,280.00	$       11,280.00	$ 0	$ 5,520
2	$         32,320.00	$       22,320.00	$ 10,000	$ 0
3	$         43,520.00	$       16,800.00	$ 26,720
4	$         72,400.00	$       16,800.00	$ 55,600
Total	$       159,520.00	$       67,200.00	$       92,320.00	$             5,520.00