The document describes a company that has 80,000 shares of 7.5% cumulative preferred stock and 200,000 shares of common stock. It provides the annual dividends paid to each class of stockholders over four years. The solution calculates the dividends owed and paid to the preferred and common shareholders each year, assuming the preferred stock is cumulative, totalling the payments over the four years.

1. york's outstanding stock consists of 80,000 shares of noncumulative 7.5% preferred stock with a
$5 par value and also 200,000 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:
Determine the amount of dividends paid each year to each of the two classes of stockholders:
preferred and common. Also compute the total dividends paid to each class for the four years
combined. Use the data in Exercise 11-8 to determine the amount of dividends paid each sear to
each of the two classes of stockholders assuming that the preferred stock is cumulative. Also
determine the total dividends paid to each class for the four years combined.
Solution
Dividends needed to be paid to the preference shareholders = 80000*5*7.5%
=$30000
2013:
Dividends paid to the preference shareholders = $20000
Dividends paid to the common shareholders = $0
2014:
Dividends paid to the preference shareholders = $28000
Dividends paid to the common shareholders = $0
2015:
Dividends paid to the preference shareholders = current year dividends + arrears of last year
=$(30000+2000+10000)
= $42000
Dividends paid to the common shareholders = $(200000-42000)

2. =$158000
2016:
Dividends paid to the preference shareholders = $30000
Dividends paid to the common shareholders = $(350000-30000)
=$320000