Pug Corporation has 10,000 shares of $10 par common stock outstanding and 20,000 shares of $100 par, 6% noncumulative, nonparticipating preferred stock outstanding. Dividends have not been paid for the past two years. This year, a $150,000 dividend will be paid. What are the dividends per share for preferred and common, respectively?

Question

Natasha Thornton

Business

28 March, 03:24

Pug Corporation has 10,000 shares of $10 par common stock outstanding and 20,000 shares of $100 par, 6% noncumulative, nonparticipating preferred stock outstanding. Dividends have not been paid for the past two years. This year, a $150,000 dividend will be paid. What are the dividends per share for preferred and common, respectively?

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Answers (1)

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Judith · Answer 1

Preference dividend per share = $6 per share

Common dividend per share = $3 per share

Explanation:

Annual preference share dividend = 20,000 * $100 * 6% = $120,000

Preference dividend per share = $120,000/20,000 = $6 per share

Common stock dividend = $150,000 - $120,000 = $30,000

Common dividend per share = $30,000/10,000 = $3 per share