Dividends Per Share ( Accounting Chapter 12 - Stock Transactions) Lightfoot Inc.
ID: 2532343 • Letter: D
Question
Dividends Per Share ( Accounting Chapter 12 - Stock Transactions)
Lightfoot Inc. a software development firm, has stock outstanding as follows: 38,400 shares of cumulative 1% preferred stock, $130 par, and 99,000 shares of $155 par common. During its first four years of operations, the following amounts were distributed as dividends: first year, $32,900; second year, $59,100; third year, $73,100; fourth year, $125,100.
Calculate the dividends per share on each class of stock for each of the four years. If no dividends are paid in a given year, enter "0".
Preferred stock (dividends per share)
1st Year ($____.___) , 2nd Year ($____.___) , 3rd Year ($____.___) , 4th Year ($____.___)
Common stock (dividends per share)
1st Year ($____.___) , 2nd Year ($____.___) , 3rd Year ($____.___) , 4th Year ($____.___)
Please explain in math how you received the answer, thank you.
Explanation / Answer
Preferred stock dividends = 38,400 shares * 130 par * 1% = 49,920
As preferred stock is cummulative, dividends not paid in an year accumulate and has to be paid in the later years.
* per share amount rounded to 3 decimal places.
Preferred stock Common stock Year 1 0.857 (32,900/38,400) 0 Year 2 1.539 (59,100/38,400) 0 Year3 1.504 (57,760/38,400) 0,155 [(73,100-57,760)/99,000] Year 4 1.3 (49,920/38,400) 0.759 [(125,100-49,920)/99,000]