Sabas Company has 20,000 shares of $100 par,2% cumulative preferred stock and 100,000 shares of $50 par common stock.The following amounts were distributed as dividends:
$\begin{array}{rr}
\text { Year 1: } & \$ 10,000 \
\text { Year 2: } & 45,000 \
\text { Year 3: } & 90,000
\end{array}$
Determine the dividends per share for preferred and common stock for the first year.

Question

Sabas Company has 20,000 shares of $100 par,2% cumulative preferred stock and 100,000 shares of $50 par common stock.The following amounts were distributed as dividends: 
$\begin{array}{rr}
\text { Year 1: } & \$ 10,000 \
\text { Year 2: } & 45,000 \
\text { Year 3: } & 90,000
\end{array}$ 
Determine the dividends per share for preferred and common stock for the first year.

Quizplus · Accepted Answer

In Year 1, the preferred stock dividend is $100 par * 2% = $2 per share. With 20,000 shares, the total preferred dividend is $40,000. Only $10,000 was distributed, so preferred shareholders receive $0.50 per share ($10,000/20,000 shares), and common shareholders receive $0.00.

Sabas Company Has 20,000 Shares of $100 Par,2% Cumulative Preferred Year 1: $10,000 Year 2: 45,000 Year 3: 90,000\begin{array}{rr}\text { Year 1: } & \$ 10,000 \\\text { Year 2: } & 45,000 \\\text { Year 3: } & 90,000\end{array} Year 1: Year 2: Year 3: ​$10,00045,00090,000​

Sabas Company Has 20,000 Shares of $100 Par,2% Cumulative Preferred $\begin{array}{rr}\text { Year 1: } & \$ 10,000 \\\text { Year 2: } & 45,000 \\\text { Year 3: } & 90,000\end{array}$