York’s outstanding stock consists of 80,000 shares of noncumulative 7.5% preferr
ID: 2483802 • Letter: Y
Question
York’s outstanding stock consists of 80,000 shares of noncumulative 7.5% preferred stock with a $5 par value and also 200,000 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: 2015 $ 20,000 2016 28,000 2017 200,000 2018 350,000 -------------------------------------------------------------------------------- Determine the amount of dividends paid each year to each of the two classes of stockholders: preferred and common. Also compute the total dividends paid to each class for the four years combined.
Explanation / Answer
Answer to the Question
Determination the amount of dividends paid each year to each of the two classes of stockholders:
Dividend for preference shareholder determined by taking least of the following two.
(1) 7.5% of the Par value of 80,000 prefered shares
and
(2) Actual dividend paid
If any short short fall, it shall not be accumulated and carried forward to subsequent year.
Dividend paid to commom shares are calculated=Total dividend-Preference dividend
Compute the total dividends paid to each class for the four years combined.
Total dividend to non cumulative preference share holders $108,000 and $490,000 to commom share holders in the last four years.
Year Noncumulative 7.5% preferred stock Common stock Total 2015 20,000 - 20,000 2016 28,000 - 28,000 2017 30,000 170,000 200,000 2018 30,000 320,000 350,000Related Questions
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