The shareholders\' equity of Crystal Company includes the items shown below. The

Question

The shareholders' equity of Crystal Company includes the items shown below. The board of directors of Crystal declared cash dividends of $2.2 million, $6.0 million, and $46.8 million in each of its first three years of operation: 2016, 2017, and 2018, respectively.

Common stock, $1 par, 50,000,000 shares outstanding

Preferred stock, 6%, $100 par, 1,000,000 shares outstanding

Required: Determine the amount of dividends per share on preferred and common stock for each of the three years. The preferred stock is cumulative and nonparticipating. (Round final answers to 2 decimal places.)

Explain please

Explanation / Answer

Cumulative preference shares are paid dividends first including any arrear dividends before any dividend is paid to Common Shareholders. Annual preferred dividends = 1000000*100*6%= $6000000 2016 Preferred 2.2 =2200000/1000000 Common 0 2017 Preferred 6 =6000000/1000000 Common 0 2018 Arrear preferred dividends = (6000000*2)-2200000-6000000=$3800000 Preferred 9.8 =(6000000+3800000)/1000000 Common 0.74 =(46800000-9800000)/50000000

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