Dividends Keener Company has had 1,400 shares of 6%, $100 par preferred stock an
ID: 2521611 • Letter: D
Question
Dividends
Keener Company has had 1,400 shares of 6%, $100 par preferred stock and 32,000 shares of $5 stated value common stock outstanding for the last 3 years. During that period, dividends paid totaled $6,900, $26,400, and $27,600 for each year, respectively.
Compute the amount of dividends that Keener must have paid to preferred shareholders and common shareholders in each of the 3 years, given the following independent assumption:
1. Preferred stock is fully participating and cumulative.
Keener Company
Schedule of Dividends
Preferred
Common
Total
Year 1
$ 6900
$ 0
$ 6900
Year 2
$ ??
$ ??
$ 26400
Year 3
$ ??
$ ??
$ 27600
Keener Company
Schedule of Dividends
Preferred
Common
Total
Year 1
$ 6900
$ 0
$ 6900
Year 2
$ ??
$ ??
$ 26400
Year 3
$ ??
$ ??
$ 27600
Explanation / Answer
Preferred stock is fully participating and cumulative. Statementshowing Computations Paticulars Year 1 Year 2 Year 3 Total Dividend Paid 6,900.00 26,400.00 27,600.00 Preference Dividend to be paid = 1400 * 100 * 6% 8,400.00 8,400.00 8,400.00 Preference Dividend Paid = Existing + arrears 6,900.00 9,900.00 8,400.00 Dividend available for common stock - 16,500.00 19,200.00 Arrears of preference Dividend 1,500.00 - -