Question

York's outstanding stock consists of 80,000 shares of noncumulative 7.5% preferred stock with a $5 par value and also 190,000 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 18,000 28,000 300,000 450,000 Determine the amount of dividends paid each year to each of the two classes of stockholders: preferred and common. (Round your "Dividend per Preferred Share" answer to 3 decimal places.) Par Value per Preferred Share Dividend Rate Dividend per Number of Preferred Preferred Share Shares Preferred Dividend Annual Preferred Dividend: Total Cash Dividend Paid Paid to Preferred Paid to Common Dividends in Arrears at year-end Year 1 Year 2 Year 3 Year 4 Total: 18,000 28,000 300,000 450,000 796,000 $ $ 0 $ 0

Answer 1

Part 1-Noncumulative preferred shares
	Par value per	Divdiend	Dividend per	Number of	Preferred Dividend
	Preferred share	Rate	Preferred share	Preferred share	for 1 year
Annual Preferred Dividend	$5	7.50%	$0.375	80,000	$30,000
	Total Cash	Paid to	Paid to	Dividends in Arrears
	Dividend Paid	Preferred	Common	at year-end
Year 1	$18,000	$18,000	$0	$0
Year 2	$28,000	$28,000	$0	$0
Year 3	$3,00,000	$30,000	$2,70,000	$0
Year 4	$4,50,000	$30,000	$4,20,000	$0
Total		$1,06,000	$6,90,000
Part 2-Cumulative preferred shares
	Par value per	Divdiend	Dividend per	Number of	Preferred Dividend
	Preferred share	Rate	Preferred share	Preferred share	for 1 year
Annual Preferred Dividend	$5	7.50%	$0.375	80,000	$30,000
	Total Cash	Paid to	Paid to	Dividends in Arrears
	Dividend Paid	Preferred	Common	at year-end
Year 1	$18,000	$18,000	$0	$12,000
Year 2	$28,000	$28,000	$0	$14,000
Year 3	$3,00,000	$44,000	$2,56,000	$0
Year 4	$4,50,000	$30,000	$4,20,000	$0
Total		$1,20,000	$6,76,000