York's outstanding stock consists of 65,000 shares of noncumulative 7.0% preferred stock with a $5 par value and also 110,000 shares of common stock with a $1 par value. During its first four years of operation, the corporation declared and paid the following total cash dividends:

2015 total cash dividends $ 11,500

2016 total cash dividends 20,700

2017 total cash dividends 260,000

2018 total cash dividends 410,000

Determine the amount of dividends paid each year to each of the two classes of stockholders: preferred and common. Also compute the total dividends paid to each class for the four years combined. (Round your "Dividend per Preferred Share" answers to 3 decimal places.)

Question

Terrence Ross

Business

6 January, 22:21

York's outstanding stock consists of 65,000 shares of noncumulative 7.0% preferred stock with a $5 par value and also 110,000 shares of common stock with a $1 par value. During its first four years of operation, the corporation declared and paid the following total cash dividends:

2015 total cash dividends $ 11,500

2016 total cash dividends 20,700

2017 total cash dividends 260,000

2018 total cash dividends 410,000

Determine the amount of dividends paid each year to each of the two classes of stockholders: preferred and common. Also compute the total dividends paid to each class for the four years combined. (Round your "Dividend per Preferred Share" answers to 3 decimal places.)

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Answers (1)

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Blaze Garner · Answer 1

Year Total Dividend Preference Dividend Ordinary Dividend

2015 11,500 11,500 0

2016 20,700 20,700 0

2017 260,000 22,750 237,250

2018 410,000 22,750 387,250

Total 702,200 77,700 624,500

Explanation:

The Preferred Stockholders receive their dividends first before the Common Stockholders.

Dividends Calculation for Preferred Stockholders is:

Dividends = 65,000 shares * $5 * 7.0%

= $22,750

Common Stockholders receive their dividends on the amount remaining after distributions to Preferred Stockholders

Year Total Dividend Preference Dividend Ordinary Dividend

2015 11,500 11,500 0

2016 20,700 20,700 0

2017 260,000 22,750 237,250

2018 410,000 22,750 387,250

Total 702,200 77,700 624,500