Oceanic Company has 15,000 shares of cumulative preferred 1% stock, $150 par and 50,000 shares of $15 par common stock. The following amounts were distributed as dividends:

Question

Year	Amount
20Y1	$45,000
20Y2	9,000
20Y3	67,500
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'.

Year	Preferred Stock
(dividends per share)	Common Stock
(dividends per share)
20Y1	$fill in the blank 1
$fill in the blank 2
20Y2	$fill in the blank 3
$fill in the blank 4
20Y3	$fill in the blank 5
$fill in the blank 6

GPT-4o mini · Answer

To calculate the dividends per share for both preferred and common stock for each year, we need to first determine the total dividends owed to preferred stockholders and then allocate any remaining dividends to common stockholders.

Step 1: Calculate Total Preferred Dividends

The preferred stock is cumulative with a 1% dividend on a par value of $150. The total amount of preferred stock is 15,000 shares.

Annual preferred dividend = Number of preferred shares × Par value per share × Dividend rate \[ \text{Annual preferred dividend} = 15,000 , \text{shares} \times $150 \times 0.01 = $22,500 \]

Step 2: Analyze Each Year

Year 20Y1: $45,000 distributed

Preferred dividends owed: $22,500
Remaining for common stock: $45,000 - $22,500 = $22,500

Dividends per share:

Preferred: \[ \text{Dividends per share} = \frac{22,500}{15,000} = $1.50 \]
Common: \[ \text{Dividends per share} = \frac{22,500}{50,000} = $0.45 \]

Year 20Y2: $9,000 distributed

Preferred dividends owed: $22,500
Preferred received: $9,000
Remaining for common stock: $0 (as preferred stock didn't get fully paid)

Dividends per share:

Preferred: \[ \text{Dividends per share} = \frac{9,000}{15,000} = $0.60 \]
Common: \[ \text{Dividends per share} = 0 \]

Year 20Y3: $67,500 distributed

Preferred dividends owed: $22,500 (for 20Y2 carryover and current)
Preferred dividends total owed (20Y1 and 20Y2 unpaid): $22,500 + $22,500 = $45,000
Preferred received in 20Y3: $22,500
Remaining for common stock: $67,500 - $22,500 = $45,000

Dividends per share:

Preferred: \[ \text{Dividends per share} = \frac{22,500}{15,000} = $1.50 \]
Common: \[ \text{Dividends per share} = \frac{45,000}{50,000} = $0.90 \]

Summary of Dividends Per Share:

| Year | Preferred Stock (dividends per share) | Common Stock (dividends per share) | |------|---------------------------------------|-------------------------------------| | 20Y1 | $1.50 | $0.45 | | 20Y2 | $0.60 | $0 | | 20Y3 | $1.50 | $0.90 |

Final Answers:

Year 20Y1 Preferred Stock: $1.50
Year 20Y1 Common Stock: $0.45
Year 20Y2 Preferred Stock: $0.60
Year 20Y2 Common Stock: $0.00
Year 20Y3 Preferred Stock: $1.50
Year 20Y3 Common Stock: $0.90