Question

Dividends Per Share Lightfoot Inc., a software development firm, has stock outstanding as follows: 15,000 shares of cumulative preferred 2% stock, $20 par, and 19,000 shares of $125 par common. During its first four years of operations, the following amounts were distributed as dividends: first year, $2,250; second year, $3,750; third year, $28,340; fourth year, $61,480. Calculate the dividends per share on each class of stock for each of the four years. Round all answers to two decimal places. If no dividends are paid in a given year, enter "0".

	1st Year	2nd Year	3rd Year	4th Year
Preferred stock (dividend per share)	$.15	$.25	$	$.40
Common stock (dividend per share)	$0	$0	$	$2.92

Can't figure out how to get the third year. Thank you.

Answer 1

Number of preferred share = 15,000

Par value per preferred share = $20

Preferred dividend rate = 2%

Dividend per preferred share = Par value per preferred share x Preferred dividend rate

= 20 x 2%

= $0.40

Annual preferred dividends= Number of preferred share x Dividend per preferred share

= 15,000 x 0.40

= $6,000

	Total Cash Dividend Paid	Paid to Preferred	Paid to Common	Dividends in Arrears at year - end
Year 1	2,250	2,250	0	3,750
Year 2	3,750	3,750	0	6,000
Year 3	28,340	12,000	16,340	0
Year 4	61,480	6,000	55,480	0
Totals	$95,820	$24,000	$71,820	$9,750

	1st Year	2nd Year	3rd Year	4th Year
Preferred stock (dividend per share)	2,250/15,000 = $0.15	3,750/15,000 = $0.25	12,000/15,000 = $0.80	6,000/15,000 = $0.40
Common stock (dividend per share)	$0	$0	16,340/19,000 = $0.86	55,480/19,000 = $2.92

Kindly comment if you need further assistance. Thanks‼!