Question 3

The outstanding capital stock of Sailor Twift Corporation consists of 1,000 shares of $10 par value, 5% preferred, and 6,000 shares of $50 par value common. The company has retained earnings of $100,000, all of which is to be paid out in dividends, and the preferred dividends were not paid during the 3 years preceding the current year.

Instructions Determine the dividend per share for common stockholders assuming the preferred stock is cumulative and participating.

Computations: Dividend per share: