CRONOW2 Online teach + TakeAssignment/takeAssignment Main.do?invoker=&takeAssignmentSession Locator=&inprogress=fal * eBook Show Me How Dividends Per Share Internal Insights Inc., a developer of radiology equipment, has stock outstanding as follows: 70,000 shares of cumulative preferred 2% stock, 560 par, and 100,000 shares of $10 par common. During its first four years of operations, the following amounts were distributed as dividends: first year, $49,000; second year, $132,000; third year, $145,000; fourth year, $160,000. Compute the dividend per share on each class of stock for each of the four years. Round alt answers to two decimal places. If no dividends are paid in a given year, leave it blank. Ist Year 2nd Year 3rd Year 4th Year Preferred stock (dividend per share) 1.40 x 3.77 X $ 2.03 X 2.40 X Common stock (dividend per share) 0 5 0 X 0.75 X 0.76 → Feedback Check My Wid Is the preferred stock cumulative or non-cumulative stock? Determine the amount of current dividends that preferred stock should receive per year. Is the question asking for a per share amount or total amount per class of stock? Next Check My Work 2 more Check My Work uses remaining

Cumulative preferred shares have a fixed dividend to be paid every year. If part of dividend is unpaid in given year, it is cumulated and paid over the next years. It is not compulsary to pay dividends on common stock. Preference share dividends are paid first in order, then common stock (if any amount left). on this basis,

Total dividend on preference shares = 70,000 shares * $60 *2%

= $84,000

dividend per preference share = $60*2% = $1.2

1. for year 1

Total dividend paid = $49,000

since total dividend paid is less than dividend payable to preferred shares, the whole dividend is distributed to preferred shareholders and remianing is cumulated over the next year. common stock shareholders do no receive any dividend.

Preferred share dividend / share = $49,000/70,000 shares = $0.7

cumulated over the next period = $84,000-$49,000 = $35,000

COmmon stock dividend / share = $0

2. For year 2,

Preference share dividend

Carried forward dividend payable year 1 = $35,000

Dividend for year 2 = $84,000

Total payable dividend = $ 119,000

dividend distributed = $132,000

preference share dividend per share = $119,000/70,000 shares = $1.7

Common stock dividend per share = ($132,000-$119,000)/100,000 shares = $0.13

carried forward preference share dividend = 0

3. for year 3

Preference share dividend

Carried forward dividend payable year 2 = $0

Dividend for year 3 = $84,000

Total payable dividend = $ 84,000

dividend distributed = $146,000

preference share dividend per share= $84,000/70,000 shares = $1.2

Common stock dividend per share = ($146,000-$84,000)/100,000 shares = $0.62

carried forward preference share dividend = 0

3. for year 4

Preference share dividend

Carried forward dividend payable year 3 = $0

Dividend for year 4 = $84,000

Total payable dividend = $ 84,000

dividend distributed = $160,000

preference share dividend per share= $84,000/70,000 shares = $1.2

Common stock dividend per share = ($160,000-$84,000)/100,000 shares = $0.76

carried forward preference share dividend = 0