
Dividends on preferred and common stock
Pecan Theatre Inc. owns and operates movie theaters throughout Florida and Georgia. Pecan Theatre has declared the following annual dividends over a six-year period: Year 1, $80,000; Year 2, $90,000; Year 3, $150,000; Year 4, $150,000; Year 5, $160,000; and Year 6, $180,000. During the entire period ended December 31 of each year, the outstanding stock of the company was composed of 250,000 shares of cumulative, preferred 2% stock, $20 par, and 500,000 shares of common stock, $15 par.
Instructions
1. Determine the total dividends and the per-share dividends declared on each class of stock for each of the six years. There were no dividends in arrears at the beginning of Year 1. Summarize the data in tabular form, using the following column headings:
Total | Preferred Dividends | Common Dividends | |||
Year | Dividends | Total | Per Share | Total | Per Share |
Year 1 | $ 80,000 | ||||
Year 2 | 90,000 | ||||
Year 3 | 150,000 | ||||
Year 4 | 150,000 | ||||
Year5 | 160,000 | ||||
Year 6 | 180,000 |
2. Determine the average annual dividend per share for each class of stock for the six-year period.
3. Assuming a market price per share of $25.00 for the

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Chapter 12 Solutions
Corporate Financial Accounting
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