Dividends on preferred and common stock OBJ. 2 Yosemite Bike Corp. manufactures mountain bikes and distributes them through retail outlets in California, Oregon, and Washington. Yosemite Bike Corp. has declared the following annual dividends over a six-year period ended December 31 of each year:

2011, $24,000; 2012, $10,000; 2013, $126,000; 2014, $100,000; 2015, $125,000; and 2016,

$125,000. During the entire period, the outstanding stock of the company was composed of 25,000 shares of cumulative preferred 2% stock, $90 par, and 100,000 shares of common stock, $4 par.

Instructions 1. Determine the total dividends and the per-share dividends declared on each class of stock for each of the six years. There were no dividends in arrears on January 1, 2011.

Summarize the data in tabular form, using the following column headings:

Year Total Dividends Preferred Dividends Common Dividends Total Per Share Total Per Share 2011 $ 24,000 2012 10,000 2013 126,000 2014 100,000 2015 125,000 2016 125,000 2. Determine the average annual dividend per share for each class of stock for the sixyear period.
3. Assuming a market price of $100 for the preferred stock and $5 for the common stock, calculate the average annual percentage return on initial shareholders’ investment, based on the average annual dividend per share

(a) for preferred stock and

(b) for common stock.