Fairmount Inc., a developer of radiology equipment, has stock outstanding as follows: 14,000 shares of cumulative 1%, preferred stock of $120 par, and 47,000 shares of $5 par common. During its first four years of operations, the following amounts were distributed as dividends: first year, $11,200; second year, $15,680; third year, $51,250; fourth year, $93,880.
Calculate the dividends per share on each class of stock for each of the four years. Round all answers to the nearest cent. If no dividends are paid in a given year, enter \"0\".
Solution
Particulars Share capital 1 2 3 4 Total dividends $11,200.00 $15,680.00 $51,250.00 $93,880.00 Preferred $1,680,000.00 $11,200.00 $15,680.00 $23,520.00 $16,800.00 Common $235,000.00 $0.00 $0.00 $27,730.00 $77,080.00 Dividend to be paid to preference share holders $16,800.00 $22,400.00 $0.00 $0.00 Shortfall of dividends to preference share holders $5,600.00 $6,720.00 $0.00 $0.00 Notes As the dividends declared is not enough to cater the dividends to be paid to preference share holders, and as the preference shares are cumulative, next year arreas dividens have to be paid first before common stock dividend is paid Arrear dividends, current year dividends to be paid =$22,400, as the amount declared as dividend is insufficient, arrears are to be paid in the next year before making any dividend payment to common stock holders Arrear dividends, current year dividends to be paid =$23,520, as the amount declared as dividend is insufficient, arrears are to be paid in the next year before making any dividend payment to common stock holders
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Fairmount Inc-- a developer of radiology equipment- has stock outstand (1).docx
1. Fairmount Inc., a developer of radiology equipment, has stock outstanding as follows: 14,000
shares of cumulative 1%, preferred stock of $120 par, and 47,000 shares of $5 par common.
During its first four years of operations, the following amounts were distributed as dividends:
first year, $11,200; second year, $15,680; third year, $51,250; fourth year, $93,880.
Calculate the dividends per share on each class of stock for each of the four years. Round all
answers to the nearest cent. If no dividends are paid in a given year, enter "0".
1st Year 2nd Year 3rd Year 4th Year
Preferred $ $ $ $
Common $ $ $ $
Solution
Particulars Share capital 1 2 3 4 Total dividends $11,200.00 $15,680.00 $51,250.00 $93,880.00
Preferred $1,680,000.00 $11,200.00 $15,680.00 $23,520.00 $16,800.00 Common $235,000.00
$0.00 $0.00 $27,730.00 $77,080.00 Dividend to be paid to preference share holders $16,800.00
$22,400.00 $0.00 $0.00 Shortfall of dividends to preference share holders $5,600.00 $6,720.00
$0.00 $0.00 Notes As the dividends declared is not enough to cater the dividends to be paid to
preference share holders, and as the preference shares are cumulative, next year arreas dividens
have to be paid first before common stock dividend is paid Arrear dividends, current year
dividends to be paid =$22,400, as the amount declared as dividend is insufficient, arrears are to
be paid in the next year before making any dividend payment to common stock holders Arrear
dividends, current year dividends to be paid =$23,520, as the amount declared as dividend is
insufficient, arrears are to be paid in the next year before making any dividend payment to
common stock holders
