Question

1.

a. Dividends Per Share

Seacrest Company has 15,000 shares of cumulative preferred 3% stock, $150 par and 50,000 shares of $5 par common stock. The following amounts were distributed as dividends:

Year 1	$135,000
Year 2	54,000
Year 3	202,500

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)	$	$	$

b. Dividends Per Share

Imaging Inc., a developer of radiology equipment, has stock outstanding as follows: 21,000 shares of cumulative preferred 1% stock, $110 par, and 70,000 shares of $20 par common. During its first four years of operations, the following amounts were distributed as dividends: first year, $15,540; second year, $40,660; third year, $75,040; fourth year, $142,100.

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".

	1st Year	2nd Year	3rd Year	4th Year
Preferred stock (dividend per share)	$	$	$	$
Common stock (dividend per share)	$	$	$	$

Answer 1

Solution:

Common stock holders are paid dividends only after the preferred stock holders dividends are paid off. In case of cumulatuve preferred stocks, the common stock holders are paid only after clearing the dividends accumulated on the preferred shares.

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