Valley corporation has 12,000 shares of 11 percent noncumulative preferred stock
ID: 2453496 • Letter: V
Question
Valley corporation has 12,000 shares of 11 percent noncumulative preferred stock and 30,000 shares of common stock outstanding. Par value for each is $10. The company paid no dividends last year. This year, a $50,000 dividend is paid. How much of the $50,000 is paid to the preferred shareholders? Groton Industries has 20,000 shares of 9 percent cumulative preferred stock and 15.000 shares of common stock outstanding. Par value for each is $50. The company has paid no dividends for the past two years. This year, a 5310,000 dividend is paid. How much of the 5310,000 is paid to the common shareholders? Triita Corporation had 5,000 share of $100 par value, 9 percent cumulative preferred stock and 30,000 shares of $10 par value common stock outstanding during each of ill first four years of operation The following amount of cash dividends were paid during the years indicated. 20 times 1. $O, 20 times 2, $80,000; 20 times 3, $220,000; 20 times 4, $270,000. Determine the cash dividends per share paid lo the preferred anti common stockholder! during each of the four years.Explanation / Answer
Answer:
1) Preferred dividend paid = Preferred share capital * Rate of dividend = 12,000*10*11% = $13,200
As the shares are non cummumlative, no arrears is required to b paid.
2) Preferred shares are cummulative. So the dividend paid this year would include the arrears of preferred dividend of last two year.
The total preferred dividend = Current preferred dividend + Arrear of preferred dividend of last two years
= 20,000 shares *$50 * 9% + 2 * 20,000 shares *$50 * 9% = $90,000 + 2*$90,000 = $270,000
So the equity dividend = Total dividend - Total Preferred dividend = $310,000 - $270,000 = $40,000 (ans)
3)
* In the year - 20X1, no preferred dividend was paid, so the dividend is required to be paid in the subsequent year before the equity dividend is paid.
So the Cumulative preferred dividend outstanding in the year 20X2, is $45,000*2 = $90,000.
Out of which, $80,000 was paid. Remaining $10,000 is required to be paid in subsequent year.
So the preferred dividend paid in 20X3, is $45,000+$10,000 = $55,000
Cumulative Preferred shares Common Shares Number of shares 5000 30000 Par value in $ 100 10 Share Capital 500000 300000 Rate of preferred dividend 9% Preferred dividend to be paid each year 45000Related Questions
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