Question

Flounder Company has outstanding 2,500 shares of $100 par, 6% preferred stock and 13,700 shares of $10 par value common. The following schedule shows the amount of dividends paid out over the last 4 years. Allocate the dividends to each type of stock under assumptions (a) and (b). Express your answers in per-share amounts using the format shown below. (Round the rate of participation to 4 decimal places, e.g. 1.4278%. Round answers to 2 decimal places, e.g. $6.85.) Assumptions (b) (a) Preferred, noncumulative, and nonparticipating Preferred Common Preferred, cumulative, and fully participating Preferred Common 13,700 to 0 Year Paid-out 2018 $13,700 $ 2019 $24,900 $ 13,700 " t 0 " 2020 $61,600 0 h 0 " 2021 $81,600 $ " 0 "

Answer 1

Assumption (a) - Preferred, non cumulative and non participating Preferred Common s 13.700 o LLLLLLLL Year Raid Out $ 13700 2018 2019 124900 $ 15000 19900 (124900-$15000) 2020 161600 $ 15000 146600 (461600- $15000) 2021 $ 81.600 $15000 $66600 $81600 -1 15000 Note - Dividend on preference Shares - 2500 shares x 1 100 X 6% = 1 15000 / year Non- Cumulative means if the preference, diudend is not said in any year, it will not be carried forward to next years for payment Note - wat preference dividend is said, - then equity dividend is paid out of the balance !

Year | Assumption (6) - Preferred Cumulative and fully particupating I laid dut Preferred Common 2018 $13700 1 13700 2019 $29900 $ 16300 $8600 CNote) $24900 & 16300) $ 61600_ L $15000 46600 881600 $15000 166600 te - Cumulative preference dividend mears that if in any year, preference diuidend is not paid then the unpaid amount will be paid in next year / years So in year 2019 Preference duidend = for 2018 = $15000 - $13700 - $Boo Cunpaid amount - 2019 15000