EX 13-2 Dividends per share Wings Inc., a software development firm, has stock o

ID: 2405025 • Letter: E

Question

EX 13-2 Dividends per share Wings Inc., a software development firm, has stock outstanding as follows: 25,000 shares of cumulative 1%, preferred stock of $40 par, and 50,000 shares of $120 par common. referred stock, ear: $0.30 During its first four years of operations, the following amounts were distributed as divi dends: first year, $7,500; second year, $10,500; third year, $25,000; fourth year, $60,000. Calculate the dividends per share on each class of stock for each of the four years. EX 13-3 Entries for issuing par stock

Explanation / Answer

Year 1 $7,500
All the $7,500 go to preferred stockholders and arrears amount to $2,500.
Common stockholders get no dividends.

Year 2 $10,500
$2,500 go to make good the arrears of Year 1 for preferred stockholders.
$8,000 go to preferred stockholders for Year 2 and arrears for Yr 2 amount to $2,000
Common stockholders get no dividends.

Year 3 $25,000
$2,000 go to make good the arrears of Yr 2 for preferred stockholders
$10,000 go to preferred stockholders for Yr 3. There are no arrears.
Common stockholders get $13,000.

Year 4 $60,000
$10,000 go to preferred stockholders
$50,000 go to common stockholders.

Total Dividend

Dividend to Preference Stock holders

Dividend to Common Stockholders

Year 1 = 7500

7500

Year 2 = 10500

10500

Year 3 = 25000

12000

13000

Year 4 = 60000

10000

50000