]Dividends Per Share Lightfoot Inc., a software development firm, has stock outstanding as follows: 40,000 shares of

Question

]Dividends Per Share Lightfoot Inc., a software development firm, has stock outstanding as follows: 40,000 shares of cumulative preferred 1% stock, $125 par, and 100,000 shares of $150 par common. During its first four years of operations, the following amounts were distributed as dividends: first year, $36,000; second year, $58,000; third year, $75,000; fourth year, $124,000. Compute the dividend per share on each class of stock for each of the four years. Round all answers to two decimal places. If no dividends are paid in a given year, leave it blank. 1st Year 2nd Year 3rd Year 4th Year Preferred stock (dividend per share) Common stock (dividend per share) 0.00 0.00 0.19 0.74 →

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Answer : Computation of Dividend per share 1st year 2nd year 3rd year 4th year Total Dividend paid (a) $ 36000 $ 58000 $ 75000 $ 124000 Preferred dividend current year paid (b) $ 36000 $ 50000 $ 50000 $ 50000 Preferred dividend arrear $ 14000 ( $ 50000-$ 36000) $ 6000 ( $ 14000-$ 8000) $ 0 $ 0 Preferred dividend arrear paid (c) $ 0 $ 8000 $ 6000 $ 0 Total Preferred dividend paid (d) = (b)+(c) $ 36000 $ 58000 $ 56000 $ 50000 Comman shares Dividend (e) =(a) - (d) $ 0 $ 0 $ 19000 $ 74000 Number of Preferred shares (f) 40000 40000 40000 40000 Number of comman shares (g) 100000 100000 100000 100000 Preferred stock (dividend per share) (d) /(f) $ 0.90 $ 1.45 $ 1.40 $ 1.25 Comman stock ( dividend per share) (e) / (g) $ 0 $ 0 $ 0.19 $ 0.74 Working note -1 cumulative preferred Dividend per year = number of share*Par value*Dividend rate = 40000*$ 125*1% = $ 50000

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]Dividends Per Share Lightfoot Inc

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Archived Solution

	1st year	2nd year	3rd year	4th year
Total Dividend paid (a)	$ 36000	$ 58000	$ 75000	$ 124000
Preferred dividend current year paid (b)	$ 36000	$ 50000	$ 50000	$ 50000
Preferred dividend arrear	$ 14000 ( $ 50000-$ 36000)	$ 6000 ( $ 14000-$ 8000)	$ 0	$ 0
Preferred dividend arrear paid (c)	$ 0	$ 8000	$ 6000	$ 0
Total Preferred dividend paid (d) = (b)+(c)	$ 36000	$ 58000	$ 56000	$ 50000
Comman shares Dividend (e) =(a) - (d)	$ 0	$ 0	$ 19000	$ 74000
Number of Preferred shares (f)	40000	40000	40000	40000
Number of comman shares (g)	100000	100000	100000	100000
Preferred stock (dividend per share) (d) /(f)	$ 0.90	$ 1.45	$ 1.40	$ 1.25
Comman stock ( dividend per share) (e) / (g)	$ 0	$ 0	$ 0.19	$ 0.74