Norton\'s outstanding stock consists of (a) 49,000 shares of cumulative 6.00% pr

Question

Norton's outstanding stock consists of (a) 49,000 shares of cumulative 6.00% preferred stock with a $10 par value and (b) 122,500 shares of common stock with a $1 par value. During its first four years of operation, the corporation declared and paid the following total cash dividends.

2009 $24,000
2010 $23,025
2011 $71,900
2012 $114,400

a)Determine the amount of dividends paid each year to each of the two classes of stockholders assuming that the preferred stock is cumulative.

b)Compute the total dividends paid to each class for the four years combined.

Explanation / Answer

2009 Preferred 24,000 Common 0 2010 Preferred 23,025 Common 0 2011 Preferred 41,175 (11,800 from prior years) Common 30,725 2012 Preferred 29,400 Common 85,000 Total preferred 117,600 Total common 115,725

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