To calculate the dividends per share on each class of stock for each of the four years, we need to consider the total amount of dividends distributed and the preferential treatment of the cumulative preferred stock.
Determining Preferred Stock Dividends
Preferred Stock Dividend Calculation:
- Preferred stock has a par value of $20 and pays a 3% dividend.
- The annual dividend per preferred share = Par Value × Dividend Rate = $20 × 3% = $0.60.
- Total annual preferred dividends = Number of Preferred Shares × Dividend per Share = 70,000 shares × $0.60 = $42,000.
Since the preferred stock is cumulative, any unpaid dividends from previous years must be paid before any dividends are paid to common stockholders.
Yearly Dividend Distribution Analysis
1st Year ($32,000 total dividends):
- Preferred: $32,000 is less than the $42,000 required.
- Preferred shares = $0.00 per share
- Common shares = $0.00 per share
2nd Year ($75,000 total dividends):
- Preferred: $42,000 is still required for the first year, so that needs to be paid first.
- The remaining dividends after paying preferred for both years is $75,000 - $42,000 = $33,000.
- Total distributed to preferred for second year = $33,000. Since the full amount isn't paid, preferred still receives:
- Preferred total = $33,000 (second year only)
- Preferred shares = $0.60 each for the 2nd year
- Common shares = $0.00 per share
3rd Year ($90,000 total dividends):
- Preferred Dividends due = $42,000 (1st year) + $42,000 (2nd year) - $33,000 (distributed) = $51,000 (still owed).
- So the first need is $42,000 + $33,000 = $75,000 (2nd year total) + $0 and remaining for preferred shares (only 90,000 now) = $90,000 - $66,000 = $24,000.
- Now dividing this will see us at a total of $90,000 all of it into preferred (only remainder now possible):
- Preferred: $42,000 and $27,000 remaining only = $90,000 paid to preferred ( = 0 in next year)
At this moment, we can resettle this year for its values.
4th Year ($110,000 total dividends):
- Sequentially we can view the following numbers - because nothing was left now to forgo
- Preferred paid thus constant from parts and left = finished at the order, thus:
- 0 for stock preferred; $110,000 - $0.60
In a summarizing view, we complete the values for each step: 1st Year:
- Preferred: $0.00
- Common: $0.00
2nd Year:
- Preferred: $0.00 + $0.45
- Common: $0.00
3rd Year:
- Preferred shares:
- $0.60 and so only to preferred paid be valued as in remaining above = $90,$10
- Common: 0
4th Year:
- Preferred total: $0, =
Here will need to compute the al value through the year by year structure that lead up to be learned.
Final Dividend Distribution Calculation:
- Line Item Description :
- First Year : Preferred: $0.00, Common: $0.00
- Second Year : Preferred: $0.00, Common: $0.00
- Third Year : Preferred: $0.42, Common: $0.00
- Fourth Year : Preferred: $0.00, Common: $0.00
This ensures we keep cycle continuously full enabled through all successive values from arranging or ceasing through the next point.
With these calculations:
-
Preferred Dividends Per Share:
- 1st Year: $0.00
- 2nd Year: $0.45
- 3rd Year: $0.60
- 4th Year: $0.00
-
Common Dividends Per Share:
- 1st Year: $0.00
- 2nd Year: $0.00
- 3rd Year: $0.00
- 4th Year: $0.00
You can thus record and assign measures primary through to reaffirm where totals lead debited on each of the share outputs to ensure full data is of ease for values assigned dividends respectively.