Question

York's outstanding stock consists of 80,000 shares of noncumulative 7.0% preferred stock with a $5 par value and also 140,000 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. $ Year 1 total cash dividends Year 2 total cash dividends Year 3 total cash dividends Year 4 total cash dividends 16,500 26,000 275,000 425,000 Exercise 13-11 Dividends on common and cumulative preferred stock LO C2 Jse the data in Exercise 13-10 to determine the amount of dividends paid each year to each of the two classes of stock assuming that che preferred stock is cumulative. (Round your "Dividend per Preferred Share" answer to 3 decimal places.) Par Value per Preferred Share Dividend Rate Dividend perNumber of Preferred P referred Share Shares Preferred Dividend Annual Preferred Dividend: Paid to Preferred Paid to Common Dividends in Arrears at year-end Year 1 Year 2 Year 3 Year 4 Totals Total Cash Dividend Paid $ 16,500 26,000 275,000 425,000 742,500 $ 0 $

Answer 1

all amounts in $	par value per preferred share	dividend rate	dividend per preferred share	no.of preferred shares	preferred dividend
annual preferred dividend	5	7.00%	0.35	80000	28000
	total cash dividend paid	paid to preferred	paid to common	dividends in arrears at year end
year 1	16500	16500		11500 (28000 - 16500)
year 2	26000	26000		13500 (11500+2000)
year 3	275000	41500 (28000+13500)	233500
year 4	425000	28000	397000
totals	742500	70500	630500

calculation of dividends -

year 1 arrears	amount ($)
total dividend to pay	28000
less:dividend paid	16500
total dividend arrear at year end 1	11500
year 2 arrears	amount ($)
total dividend to pay	28000
less:dividend paid	26000
dividend arrear at end year 2	2000
add:dividend arrear at end year 1	11500
total dividend arrear at year end 2	13500
preferred dividend paid for year end 3	amount ($)
total dividend to pay	28000
add:total dividend arrear at year end 2	13500
total dividend paid for year 3	41500