Question
In: Accounting
Patch Garden plans to distribute $150 000 in dividends. It has 20,000 7 per cent preferred...
Patch Garden plans to distribute $150 000 in dividends. It has 20,000 7 per cent preferred share (cumulative) originally issued at $10 and 60 000 ordinary shares. How much will be distributed per share on preferred and ordinary shares?
Preferred shares $1.68; Ordinary shares $1.68
Preferred shares $3.35; Ordinary shares $1.12
Preferred shares $0.70; Ordinary shares $2
Preferred shares $0.70; Ordinary shares $2.26
Solutions
Expert Solution
Preferred shares $0.70; Ordinary shares $2.26
Working:
| Step-1:Calculation of dividend payable to shareholders | |||||||||||||
| a. | Dividend payable to preferred shareholders | = | Number of Preferred Shars x Face Value per Share x Dividend Rate | ||||||||||
| = | 20,000 | x | $ 10 | x | 7% | ||||||||
| = | $ 14,000 | ||||||||||||
| b. | Total Dividend Declared | $ 1,50,000 | |||||||||||
| Less:Dividend payable to preferred shareholders | $ 14,000 | ||||||||||||
| Dividend payable to ordinary shareholders | $ 1,36,000 | ||||||||||||
| Step-2:Calculation of Dividend per Share | |||||||||||||
| Total Dividend | Number of shares | Dividend Per Share | |||||||||||
| a | b | a/b | |||||||||||
| Preferred Shares | $ 14,000 | 20000 | $ 0.70 | ||||||||||
| Ordinary Shares | $ 1,36,000 | 60000 | $ 2.27 | ||||||||||
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