Question
Dividends Per Share Baxter Inc., a developer of radiology equipment, has stock outstanding as follows: 18,000 shares of cumulative 2%, preferred stock of $75 par, and 40,000 shares of $10 par common. During its first four years of operations, the following amounts were distributed as dividends: first year, $22,500; second year, $28,800; third year, $40,100; fourth year, $77,000. Calculate the dividends per share on each class of stock for each of the four years. Round all answers to the nearest whole cent. If no dividends are paid in a given year, enter "0". 1st Year 2nd Year 3rd Year 4th Year Preferred $ $ $ $ Common $ $ $ $
Explanation / Answer
Cumulative preferred means that any accumulated and unpaid dividends due to preferred shareholders are paid to the preferred shareholders before ANY dividends are paid to the common shareholders. Amt due annually to preferred = 18,000 * $75 * 0.02 = $27,000 Yr 1 Ttl divs: 22,500