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.

b. Preferred stock is nonparticipating and cumulative. Preferred dividends are 2 years in arrears at the beginning of the year.

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