A portion of the stockholders’ equity section from the balance cheet of WC appears as below. Stockholders’ equity: Preferred stock, 8% cumulative,$50 par, 40,000 shares authorized , issued and outstanding…………………………………………………………………. $2,000,000 Preferred stock, 12% noncumulative, $100 par, 8,000 shares authorized, Issued, and outstanding…………………………………… 800,000 Common stock, $5 par, 400,000 shares authorized, issued And outstanding……………………………………………… 2,000,000 Total paid -in capital……………………………………………….. $4,800,000 Assume that all stock issued on January 1, and that no dividends were paid during the first two years of operation. During the third year, WC paid total cash dividends of $736,000. Compute the amount of cash dividends paid per share during the third year for each of the three classes of stock. Compute the dividends paid per share during the third year for each of the three classes of stock. What was the average issue price for each type of preferred stock?

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter10: Stockholder's Equity

Section: Chapter Questions

Problem 5MCQ

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A portion of the stockholders’ equity section from the balance cheet of WC appears as below.

Stockholders’ equity:

Preferred stock, 8% cumulative,$50 par, 40,000 shares authorized

, issued and outstanding…………………………………………………………………. $2,000,000

Preferred stock, 12% noncumulative, $100 par, 8,000 shares authorized,

Issued, and outstanding…………………………………… 800,000

Common stock, $5 par, 400,000 shares authorized, issued

And outstanding……………………………………………… 2,000,000

Total paid -in capital……………………………………………….. $4,800,000

Assume that all stock issued on January 1, and that no dividends were paid during the first two years of operation. During the third year, WC paid total cash dividends of $736,000.

Compute the amount of cash dividends paid per share during the third year for each of the three classes of stock.
Compute the dividends paid per share during the third year for each of the three classes of stock.
What was the average issue price for each type of preferred stock?

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