Question

Preferred Stock- 5% $11 Par Value 5,500 shares authorized 4,000 shares issued and outstanding

Common Stock - $.20 Par Value 2,000,000 shares authorized, 1,650,000 shares issued and outstanding

Requirement 1.

Sapphire declares cash dividends of $28,000 for 2018.

How much of the dividends goes to preferred? stockholders? How much goes to common? stockholders? ?(Complete all input boxes. Enter? "0" for any zero? amounts.)

Sapphire dividend would be divided between preferred and common stockholders in this? manner:

Total Dividend
Dividend to preferred stockholders:
Dividend in arrears
Current year dividend
Total dividend to preferred stockholders
Dividend to common stockholders

Requirement 2. Assume the preferred stock is cumulative and Sapphire passed the preferred dividend in 2016 and 2017

In 2018 the company declares cash dividends of $35,000.

How much of the dividend goes to preferred? stockholders? How much goes to common? stockholders? ?(Complete all input boxes. Enter? "0" for any zero? amounts.)

Sapphire dividend would be divided between preferred and common stockholders in this? manner:

Total Dividend
Dividend to preferred stockholders:
Dividend in arrears
Current year dividend
Total dividend to preferred stockholders
Dividend to common stockholders

Requirement 3. Assume the preferred stock is noncumulative and Sapphire passed the preferred dividend in 2016 and 2017

In 2018 the company declares cash dividends of $35,000.

How much of the dividend goes to preferred? stockholders? How much goes to common? stockholders? ?(Complete all input boxes. Enter? "0" for any zero? amounts.) Sapphire dividend would be divided between preferred and common stockholders in this? manner:

Total Dividend
Dividend to preferred stockholders:
Dividend in arrears
Current year dividend
Total dividend to preferred stockholders
Dividend to common stockholders

Answer 1

• All working forms part of the answer
• Working for yearly preference dividend:

	No.	Par Value	Amount	Per Year dividend
	[A]	[B]	[C = A x B]	[D = C x 5%]
Preferred Stock issued	4000	$                   11.00	$                        44,000.00	$        2,200.00

• All answers

Requirement 1
A	Total Dividend		$          28,000.00
	Dividend to preferred Stockholders:
B	Dividend in Arrears	$                         -
C	Current Year dividend	$            2,200.00
D = B+C	Total dividend to preferred stockholders		$             2,200.00
E = A - D	Dividend to common stockholders		$          25,800.00
Requirement 2
A	Total Dividend		$          35,000.00
	Dividend to preferred Stockholders:
B	Dividend in Arrears [2200 + 2200]	$            4,400.00
C	Current Year dividend	$            2,200.00
D = B+C	Total dividend to preferred stockholders		$             6,600.00
E = A - D	Dividend to common stockholders		$          28,400.00
Requirement 3
A	Total Dividend		$          35,000.00
	Dividend to preferred Stockholders:
B	Dividend in Arrears	$                         -
C	Current Year dividend	$            2,200.00
D = B+C	Total dividend to preferred stockholders		$             2,200.00
E = A - D	Dividend to common stockholders		$          32,800.00