Weaver Corporation has the following stock outstanding. Common Stock $50 par val

Question

Weaver Corporation has the following stock outstanding. Common Stock $50 par value, 6,000 shares outstanding Preferred Stock, 6%, $ 100 par value, 1,00 shares outstanding REQUIRED: Compute the amount of dividends to be paid in total and per share to the common and preferred stockholders, respectively, for each of the following separate cases. Show supporting computations. The preferred stock is noncumulative and nonparticipating. The company has not paid dividends for the current year or the prior years. A total of $21,000 in dividends were paid. The preferred stock is cumulative and nonparticipating. The company has not paid dividends for the current year or the previous two years. A total of $40,500 in dividends were paid. The preferred stock is noncumulative and fully participating. The company has not paid dividends for the current year or the prior year. A total of $32,00 in dividends were paid. The preferred stock is cumulative and partially participating up to an additional 5%. The company has not paid dividends for the current year or the previous two years. A total of $56,000 in dividends were paid.

Explanation / Answer

1) Preferred Stock - 6% 100 par value , 1000 shares outstanding

= 1000x100 = 100000x6% = $6000

Dividend paid to Preferrence shareholders = $6000, Per share dividend = 6000/1000 = $6

Dividend paid to Equity SHareholders = 21000 - 6000 = $15000 Per share dividend = 15000/6000 = $2.5

2) Preference Shares - Dividend not paid for prior two years .Stock is cummulative and non participating

Dividend of Preference shares = 6000+6000 = @12000 Per share dividend = 12000/2000 = $6 per share

Dividend for Common Stock = 40500 - 12000 = $28500, Per share dividend = 28500/6000 = $4.75 per share

3) Preferred stock non commulative and fully participating

1000x100 = 100000x6% = $6000 Per share dividend = 6000/1000 = $6

Common Stock = 32000 - 6000 = $26000 per share dividend = 26000/6000 = $4.33

4) Preferred Stock dividend = 1000x100 =100000x6% =$ 6000

Common Stock dividend = 56000-6000 = $50000

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