Seventy-Two Inc., a developer of radiology equipment, has stock outstanding as follows: 60,000 shares of cumulative preferred 2% stock, $60 par and 300,000 shares of $20 par common. During its first four years of operations, the following amounts were distributed as dividends: first year, $51,000; second year, $105,000; third year, $81,000; fourth year, $120,000. Required:
Determine the dividends per share on each class of stock for each of the four years.

The Preferred shares are cumulative which means that they will have to be paid eventually even if they weren't completed in one period.

Preferred dividend:

= 60,000 * 60 * 2%

= $72,000 per year

                                         First year:                                                            

Preferred dividend                                              Common Dividend

= $51,000                                                             = $0

They will collect it all and be owed:

= 72,000 - 51,000

= $21,000

                                              Second year:                                                            

Preferred dividend                                              Common Dividend

= 21,000 + 72,000                                               = 105,000 - 93,000

= $93,000                                                            = $12,000

Preferred accrued has been

paid off.

                                          Third year:                                                            

Preferred dividend                                              Common Dividend

= $72,000                                                            = 81,000 - 72,000

                                                                            = $9,000

                                          Fourth year:                                                            

Preferred dividend                                              Common Dividend

= $72,000                                                            = 120,000 - 72,000

                                                                             = $48,000

answer///supply is elastic, and demand is inelastic;