Dividends Andrews company has $80,000 available to paid dividends.It has 2,000 shares of 10%, $100 par, preferred
Question:
Dividends
Andrews company has $80,000 available to paid 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.
1. Determine the amout of dividends to be paid to each class of shareholder for each of the following independent assumptions. If an amount box required no entry, leaved it blank.
a. Preferred stock is nonparticipating and noncumulative.
preferred common
preferred dividend _____________ ____________
remainder ______________ _______________
TOTAL $________________ $_________________
b. Preferred stock is nonparticipating and cumulative. Preferred dividends are 2 years in arrears at the beginning of the year.
preferred common
Dividends in arrears $_____________ $__________
Current preferred dividend ______________ ___________
Remainder ______________ ____________
TOTAL _____________ _____________
c. 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 ____________ ____________
Current preferred dividends ____________ ______________
Common proportional share ______________ _______________
Remainder _______________ _______________
TOTAL _______________ ______________
2. For1(a), compute the dividends yield on the preferred stock and common stock.
Preferred stock
Common stock