Seacrest Company has 25,000 shares of cumulative preferred 1% stock, $150 par and 50,000 shares of $10 par common stock. The following amounts were distributed as dividends: Year 1 $75,000 Year 2 30,000 Year 3 112,500 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'.

Question

04-10-2019
Business

contestada

Seacrest Company has 25,000 shares of cumulative preferred 1% stock, $150 par and 50,000 shares of $10 par common stock. The following amounts were distributed as dividends: Year 1 $75,000 Year 2 30,000 Year 3 112,500 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'.

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DeniceSandidge DeniceSandidge · Answer 1 · 2019-10-07T12:54:17+02:00

Answer:

for 1st year dividend per equity share = $0.75

for 2nd year 0

for 3rd year dividend per equity share = $1.35

Explanation:

given data

share = 25000

cumulative preferred stock = 1%

par value = $150

share = 50000

common stock = $10

to find out

Determine the dividends per share for preferred and common stock for each year

solution

for 1st year

dividends amount Year 1 = $75,000

so total Preferred dividend to be paid = 150 × 1% × 25000

total preferred dividend = $37500

so dividend per share = [tex]\frac{37500}{25000}[/tex]

dividend per share = $1.5

so remaining dividend after payment of preferred dividend is

dividend after payment of preferred dividend = 75000 - 37500

dividend after payment of preferred dividend = $37500

so dividend per equity share will be

dividend per equity share = [tex]\frac{37500}{50000}[/tex]

dividend per equity share = $0.75

and

for 2nd year

dividends amount Year 2 = $30,000

and total preferred dividend = $37500

so dividend per share will be = [tex]\frac{30000}{25000}[/tex]

dividend per share = $1.2

so since the preferred stock cumulative dividend to be paid in next year due to less payment

remaining dividend = 30000 - 37500 = - 7500

so current yeas will be $ 0.3 per share or $7500

so remaining dividend is 0

and

for 3rd year

dividends amount Year 3 = $112,500

total dividend paid to preferred stock = 37500 + 7500 = $45000

so preferred dividend per share = [tex]\frac{45000}{25000}[/tex]

preferred dividend per share =- $1.8

remaining dividend = 112,500 - 45000 = $67500

so dividend per equity share = [tex]\frac{64500}{50000}[/tex]

dividend per equity share = $1.35