Wallace Inc., a developer of radiology equipment, has stock outstanding as follows: 30,000 shares of cumulative preferred 2% stock, $90 par and 125,000 shares of $10 par common. During its first four years of operations, the following amounts were distributed as dividends: first year, $24,000; second year, $81,000; third year, $92,000; fourth year, $139,000.
Calculate the dividends 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, enter "0".
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To calculate the dividends per share for each class of stock, we need to divide the total dividends distributed by the number of shares for that class.
Let's start by calculating the dividends per share for the cumulative preferred 2% stock:
1. First year:
Total dividends distributed: $24,000
Number of shares of cumulative preferred 2% stock: 30,000
Dividends per share = Total dividends distributed / Number of shares of cumulative preferred 2% stock
Dividends per share = $24,000 / 30,000 = $0.80
2. Second year:
Total dividends distributed: $81,000
Number of shares of cumulative preferred 2% stock: 30,000
Dividends per share = $81,000 / 30,000 = $2.70
3. Third year:
Total dividends distributed: $92,000
Number of shares of cumulative preferred 2% stock: 30,000
Dividends per share = $92,000 / 30,000 = $3.07
4. Fourth year:
Total dividends distributed: $139,000
Number of shares of cumulative preferred 2% stock: 30,000
Dividends per share = $139,000 / 30,000 = $4.63
Now, let's calculate the dividends per share for the common stock:
1. First year:
Total dividends distributed: $24,000
Number of shares of common stock: 125,000
Dividends per share = $24,000 / 125,000 = $0.19
2. Second year:
Total dividends distributed: $81,000
Number of shares of common stock: 125,000
Dividends per share = $81,000 / 125,000 = $0.65
3. Third year:
Total dividends distributed: $92,000
Number of shares of common stock: 125,000
Dividends per share = $92,000 / 125,000 = $0.74
4. Fourth year:
Total dividends distributed: $139,000
Number of shares of common stock: 125,000
Dividends per share = $139,000 / 125,000 = $1.11
Therefore, the dividends per share on each class of stock for each of the four years are as follows:
Cumulative Preferred 2% Stock:
- First year: $0.80
- Second year: $2.70
- Third year: $3.07
- Fourth year: $4.63
Common Stock:
- First year: $0.19
- Second year: $0.65
- Third year: $0.74
- Fourth year: $1.11