A portion of the stockholders\' equity section from the balance sheet of Walland

Question

A portion of the stockholders' equity section from the balance sheet of Walland Corporation appears as follows:

Preferred stock, 9% cumulative, $50 par, 40,000 shares authorized, issued and outstanding- $2,000,000
Preferred stock, 12% non-cumulative, $100 par, 8,000 shares authorized, issued, &outstanding- $800,000
Common Stock, $5 par, 400,000 shares authorized, issued & outstanding- $2,000,000
Total paid in capital- $4,800,000

Assume that all the stock was issued on January 1 and that no dividends were paid during the first two years of operation. During the third year, Walland Corporation paid total cash dividends of $736,000.

A. Compute the amount of cash dividends paid during the 3rd year to each of three classes of stock.

Cumulative Dividends-
Non-Cumulative Dividends-
Common Stock-

B. Computer the dividends paid per share during the 3rd year for each of the 3 classes of stock.
Cumulative Dividends- Per share
Non-Cumulative Dividends- Per share
Common Stock- Per share

Explanation / Answer

A) For cumulative the dividend will be accumulated, So cumulative dividends = $2,000,000 * 9% * 3 = $540000 Non-Cumulative Dividends = $800,000 * 12% = $96000 Common stock dividend = $736000 - $96000 - $540000 = $100000 B) Cumulative Dividends- $540000/40,000= $13.5 Per share Non-Cumulative Dividends- $96000/ 8,000 = $12 Per share Common Stock- Per share = $100000/400,000 = $ 0.25 Per Share

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