Pug Corporation has 10,000 shares of $10 par common stock outstanding and 20,000 shares of $100 par, 6% noncumulative, nonparticipating preferred stock outstanding. Dividends have not been paid for the past two years. This year, a $150,000 dividend will be paid. What are the dividends per share for preferred and common, respectively?

Question

Quizplus · Accepted Answer

Preferred: $6 per share for 20,000 shares equals $120,000 total. $150,000 - $120,000 = $30,000 remaining for common. Dividing $30,000 by 10,000 shares of common stock equals $3 per share. Therefore, dividends per share for preferred and common are $6 and $3, respectively.

Pug Corporation Has 10,000 Shares of $10 Par Common Stock