York’s outstanding stock consists of 80,000 shares of noncumulative 6.5% preferred stock with a $5 par value and also 250,000 shares of common stock with a $1 par value. During its first four years of operation, the corporation declared and paid the following total cash dividends.
2016 total cash dividends $15,500 2018 total cash dividends $225,000
2017 total cash dividends 24,000 2019 total cash dividends 375,000
Determine the amount of dividends paid each year to each of the two classes of stockholders: preferred and common. Also compute the total dividends paid to each class for the four years combined.
Per Value Dividend Rate Dividend Per Number of Preferred
Per Preferred Share Preferred Share Preferred Share Dividend
Annual Preferred Dividend:
Total Cash Paid to Paid to Dividends in
Dividend Paid Preferred Common Arrears at year-end
2016 15,500
2017 24,000
2018 225,000
2019 375,000
Total: $639,500

Answer and Explanation:

The presentation of each year dividend amount and the total dividend paid  is shown below:

Particulars  Par        Dividend  Dividend   No. of         Preferred

                   value     Rate         Per            preferred   dividend

                   Preferred              Preferred   shares                  

                   shares                   shares

Annual

preferred

dividend     $5                  6.50%      $0.325        $80,000          $26,000

Particulars Total cash     Paid to            Paid to   Dividend in arrears

                  dividend        preferred       common  paid at year end

2016         $15,500           $15,500       $0              $0

2017          $24,000          $24,000      $0              $0

2018         $225,000        $26,000       $199,000  $0

2019         $375,000        $26,000       $349,000 $0

Total         $639,500        $91,500        $548,000 $0

The dividend is the amount which is paid to the preference shareholders and the equity shareholders but the first the payment is made to preference shareholders

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