Explanation Cash dividends: The amount of cash provided by a corporation out of its distributable profits to its shareholders as a return for the amount invested by them is referred as cash dividends. Common stock: These are the ordinary shares that a corporation issues to the investors in order to raise funds. In return, the investors receive a share of profit from the profits earned by the corporation. The dividend payments are not guaranteed and are paid after the payment made to the preferred stockholders. Preferred stock: The stock that provides a fixed amount of return (dividend) to its stockholder before paying dividends to common stockholders is referred as preferred stock. A preferred stock may be cumulative and non-cumulative. A cumulative preferred stock implies that a preferred stockholder is entitled to receive dividends for the current year plus any unpaid dividends of the previous years, before the dividends paid to the common stockholders. Dividend per share: Dividend per share represents the amount of dividend paid to each shareholders of the business. Determine the dividends per share for preferred and common stock for each year. Particulars Year 1 Year 2 Year 3 Amount distributed $21,600 $4,000 $100,800 Preferred dividend $6,400 $4,000 $8,800 Common dividend $15,200 $0 $92,000 Dividend per share: Preferred stock ( Preferred dividend 16 , 000 preference shares ) $0.40 $0.25 $0.55 Common stock ( Common dividend 80 , 000 common shares ) $0.19 None $1

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Financial Accounting

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Calculate the dividends per share for preferred and common stock for each year.

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Calculate the dividends per share for preferred and common stock for each year.

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Chapter 13 Solutions