Andrews Company has $80,000 available to pay dividends. It has 2,000 shares of 1

Question

Andrews Company has $80,000 available to pay dividends. It has 2,000 shares of 10%, $100 par, preferred stock and 30,000 shares of $10 par common stock outstanding. The preferred stock is selling for $125 per share, and the common stock is selling for $20 per share.

Preferred stock is fully participating and cumulative. Preferred dividends are 1 year in arrears at the beginning of the year.

                                                                     Preferred                                            Common

Dividends in arrears                                      xxxx(need answer)

Common proportional share                                                                                    xxxx (need answer)

Remainder                                                    xxx (need answer)                             xxxx (need answer)

Total                                                            xxx (need answer)                             xxxx (need answer

Explanation / Answer

10,000 / 300000*100

Details calculation Amount in $ Cash available to pay dividends 80,000 Less: Arrear Preferred dividend 200000 * 10% (20,000) Less: Proportional arrear dividend of common share 30000 *10 *10% (30,000) Remainder for current years dividend 30,000 Less: Current years preferred dividend (20,000) Cash remaining for common share dividend for current year $10,000 Percentage of dividend to common stock

10,000 / 300000*100

3.33%

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