Wade’s outstanding stock consists of 48,000 shares of noncumulative
7.50% preferred stock with a $10 par value and also 120,000 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.
| |
| 2011 | $ | 13,000 |
| 2012 | | 21,000 |
| 2013 | | 90,000 |
| 2014 | | 197,000 |
|
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:
| | Preferred | Common |
| 2011 ($13,000 paid) | | | | |
| Preferred* | $ | 13,000 | | |
| Common—remainder | | | $ | 0 |
| |
|
|
|
|
| Total for the year | $ | 13,000 | $ | 0 |
| |
|
|
|
|
| 2012 ($21,000 paid) | | | | |
| Preferred* | $ | 21,000 | | |
| Common—remainder | | | $ | 0 |
| |
|
|
|
|
| Total for the year | $ | 21,000 | $ | 0 |
| |
|
|
|
|
| 2013 ($90,000 paid) | | | | |
| Preferred* | $ | 36,000 | | |
| Common—remainder | | | $ | 54,000 |
| |
|
|
|
|
| Total for the year | $ | 36,000 | | 54,000 |
| |
|
|
|
|
| 2014 ($197,000 paid) | | | | |
| Preferred* | $ | 36,000 | | |
| Common—remainder | | | $ | 161,000 |
| |
|
|
|
|
| Total for the year | $ | 36,000 | $ | 161,000 |
| |
|
|
|
|
| 2011-2014 ($321,000 paid) | | | | |
| |
|
|
|
|
| Total for four years | $ | 106,000 | $ | 215,000 |
| |
|
|
|
|
|
|
*
The holders of the noncumulative preferred stock are entitled to no
more than $36,000 of dividends in any one year (7.50% × $10 × 48,000
shares).
|
