Short Exercise 13-5 (Algorithmic) Preferred Stock Dividends with Dividends in Ar

Question

Short Exercise 13-5 (Algorithmic) Preferred Stock Dividends with Dividends in Arrears The Petric, Inc. has 2,000 shares of $100, 8 percent cumulative preferred stock outstanding and 40,000 shares of $1 par value common stock outstanding. In the company's first three years of operation, its board of directors paid cash dividends as follows: 2013, none; 2014, $40,000; and 2015, $80,000 Determine the total cash dividends and dividends per share paid to the preferred and common stockholders during each of the three years. If required, round your answers to the nearest cent. If an amount is zero, enter "O" Preferred Stock Common Stock Total Dividends Dividends Per Share Dividends Per Share Allocated 2013 2014 2015

Explanation / Answer

2013 Diviend paid=nil 2014 Dividend 40000 Less:Paid to preferred stock Arrears-2013 (2000*100*8%) 16000 Current year (2000*100*8%) 16000 32000 Balance to common stock 8000 Dividend per share: Preferred stock=32000/2000=$16 per share Common stock=8000/40000=$0.20 per share 2015 Dividend 80000 Less:Paid to preferred stock Current year (2000*100*8%) 16000 Balance to common stock 64000 Dividend per share: Preferred stock=16000/2000=$8 per share Common stock=64000/40000=$1.6 per share

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