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21 July, 16:52

Oceanic Company has 15,000 shares of cumulative preferred 2% stock, $150 par and 50,000 shares of $15 par common stock. The following amounts were distributed as dividends: 20Y1 $67,500 20Y2 22,500 20Y3 135,000 Determine the dividends per share for preferred and common stock for each year. Round all answers to two decimal places. If an answer is zero, enter '0'.

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  1. 21 July, 17:10
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    Answer and Explanation:

    The computation of the dividends per share for preferred and common stock is shown below:-

    Annual preferred Dividend = 15000 * $100 * 2% = $30,000

    Oceanic Company

    2011 2012 2013

    Net income (A) $67,500 $22,500 $135,000

    Less: Total Preferred Dividend paid

    Preferred Dividend $30,000 $22,500 $37,500

    ($30,000 + ($30,000 - $22,500)

    Available common stock $37,500 $0 $97,500

    Preferred Stock holder

    outstanding $15,000 $15,000 $15,000

    Common stock shares

    outstanding 50,000 50,000 50,000

    Dividend per share

    Preferred $2.00 $1.50 $2.50

    For computing the dividend per share we simply divide preferred dividend by Preferred Stock holder outstanding

    Common stock $0.75 $0.00 $1.95

    In the same manner for computing the Dividend per share common stock we simply divide the available common stock by common stock shares outstanding.
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