Question

Beagle Corporation has 20,000 shares of $10 par common stock outstanding and 10,000 shares of $100 par, 6% cumulative, nonparticipating preferred stock outstanding. Dividends have not been paid for the past two years. This year, a $300,000 dividend will be paid. What are the dividends per share payable to preferred and common, respectively?

Answer 1

Answer:

$18 per share; $6 per share

Explanation:

Total dividend paid to Preferred Stockholders:

= Outstanding preferred stock × Par value of preferred stock × 6% × No. of years

= 10000 × 100 × 6% × 3

= $180,000

Total dividend per share paid to Preferred Stockholders:

= Total dividend paid to preferred ÷ No. of outstanding shares

= $180,000 ÷ 10,000 shares

= 18 per share

Total dividend per share paid to common Stockholders:

= (Dividend paid in the current year - Total dividend paid to preferred) ÷  Common stock outstanding shares

= ($300,000 - $180,000) ÷ 20,000

= $120,000 ÷ 20,000 shares

= 6 per share