Dividends Andrews Company has $95,000 available to pay dividends. It has 2,000 shares of 10%, $100 par, preferred stock and 20,000 shares of $10 par common stock outstanding. The preferred stock is selling for $100 per share, and the common stock is selling for $20 per share. Required 1. Determine the amount of dividends to be paid to each class of shareholder for each of the following independent assumptions. If an amount box required no entry, leave it blank. a. Preferred stock is nonparticipating and noncumulative. Andrews Company Schedule of dividends to be paid Preferred Common Preferred dividend $ Remainder to common $ Total $ $ b. Preferred stock is nonparticipating and cumulative. Preferred dividends are 2 years in arrears at the beginning of the year. Andrews Company Schedule of dividends to be paid Preferred Common Dividends in arrears $ $ Current preferred dividend $ Remainder to common Total $ $ c. Preferred stock is fully participating and cumulative. Preferred dividends are 1 year in arrears at the beginning of the year. Andrews Company Schedule of dividends to be paid Preferred Common Dividends in arrears $ $ Current preferred dividends Common proportional share Remainder shared Total $ $ 2. For 1(a), compute the dividend yield on the preferred stock and the common stock. Dividend yield Preferred stock % Common stock %

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Dividends

Andrews Company has $95,000 available to pay dividends. It has 2,000 shares of 10%, $100 par, preferred stock and 20,000 shares of $10 par common stock outstanding. The preferred stock is selling for $100 per share, and the common stock is selling for $20 per share.

Required

1. Determine the amount of dividends to be paid to each class of shareholder for each of the following independent assumptions. If an amount box required no entry, leave it blank.

a. Preferred stock is nonparticipating and noncumulative.

Andrews Company
Schedule of dividends to be paid

	Preferred	Common
Preferred dividend	$
Remainder to common		$
Total	$	$

b. Preferred stock is nonparticipating and cumulative. Preferred dividends are 2 years in arrears at the beginning of the year.

Andrews Company
Schedule of dividends to be paid

	Preferred	Common
Dividends in arrears	$	$
Current preferred dividend		$
Remainder to common
Total	$	$

c. Preferred stock is fully participating and cumulative. Preferred dividends are 1 year in arrears at the beginning of the year.

Andrews Company
Schedule of dividends to be paid

	Preferred	Common
Dividends in arrears	$	$
Current preferred dividends
Common proportional share
Remainder shared
Total	$	$

2. For 1(a), compute the dividend yield on the preferred stock and the common stock.

	Dividend yield
Preferred stock	%
Common stock	%

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