Wings Inc., a software development firm, has stock outstanding as follows: 25,000 shares of cumulative 1%, preferred stock of $40 par, and 50,000 shares of $120 par common. During its first four years of operations, the following amounts were distributed as dividends: first year, $7,500; second year, $10,500; third year, $25,000; fourth year, $60,000.Calculate the dividends per share on each class of stock for each of the four years. Round all answers to the nearest whole cent. If no dividends are paid in a given year, enter "0".

Question

Wings Inc., a software development firm, has stock outstanding as follows: 25,000 shares of cumulative 1%, preferred stock of $40 par, and 50,000 shares of $120 par common. During its first four years of operations, the following amounts were distributed as dividends: first year, $7,500; second year, $10,500; third year, $25,000; fourth year, $60,000.Calculate the dividends per share on each class of stock for each of the four years. Round all answers to the nearest whole cent. If no dividends are paid in a given year, enter "0".

Answer 1

To calculate the dividends per share on each class of stock for each of the four years, we need to divide the total dividends paid by each class of stock by the number of shares outstanding for that class of stock.

First, let's calculate the dividends per share for the cumulative preferred stock for each year:

Year 1:
Number of shares of preferred stock = 25,000
Dividends paid = $7,500
Dividends per share = $7,500 / 25,000 shares = $0.30 per share

Year 2:
Number of shares of preferred stock = 25,000
Dividends paid = $10,500
Dividends per share = $10,500 / 25,000 shares = $0.42 per share

Year 3:
Number of shares of preferred stock = 25,000
Dividends paid = $25,000
Dividends per share = $25,000 / 25,000 shares = $1.00 per share

Year 4:
Number of shares of preferred stock = 25,000
Dividends paid = $60,000
Dividends per share = $60,000 / 25,000 shares = $2.40 per share

Next, let's calculate the dividends per share for the common stock for each year:

Year 1:
Number of shares of common stock = 50,000
Dividends paid = $7,500
Dividends per share = $7,500 / 50,000 shares = $0.15 per share

Year 2:
Number of shares of common stock = 50,000
Dividends paid = $10,500
Dividends per share = $10,500 / 50,000 shares = $0.21 per share

Year 3:
Number of shares of common stock = 50,000
Dividends paid = $25,000
Dividends per share = $25,000 / 50,000 shares = $0.50 per share

Year 4:
Number of shares of common stock = 50,000
Dividends paid = $60,000
Dividends per share = $60,000 / 50,000 shares = $1.20 per share

So, the dividends per share on each class of stock for each of the four years are:

Year 1:
Preferred stock: $0.30 per share
Common stock: $0.15 per share

Year 2:
Preferred stock: $0.42 per share
Common stock: $0.21 per share

Year 3:
Preferred stock: $1.00 per share
Common stock: $0.50 per share

Year 4:
Preferred stock: $2.40 per share
Common stock: $1.20 per share

Answer 2

To calculate the dividends per share on each class of stock for each of the four years, we need to follow these steps:

1. Calculate the dividends for the preferred stock:
- Multiply the number of preferred shares by the dividend rate of 1% to find the total dividend for the preferred stock.

2. Calculate the dividends for the common stock:
- Subtract the preferred stock dividend from the total dividends distributed each year to find the dividends for the common stock.

3. Calculate the dividends per share for each class of stock:
- Divide the dividends for each class of stock by the number of shares for that class to get the dividends per share.

Let's calculate the dividends per share for each class of stock for each of the four years:

Year 1:
- Preferred Stock Dividend: 25,000 shares × 1% × $40 par = $10,000
- Common Stock Dividend: $7,500 - $10,000 = $0 (No dividends for common stock)
- Dividends per Preferred Share: $10,000 / 25,000 shares = $0.40
- Dividends per Common Share: $0 (No dividends for common stock)

Year 2:
- Preferred Stock Dividend: 25,000 shares × 1% × $40 par = $10,000
- Common Stock Dividend: $10,500 - $10,000 = $500
- Dividends per Preferred Share: $10,000 / 25,000 shares = $0.40
- Dividends per Common Share: $500 / 50,000 shares = $0.01

Year 3:
- Preferred Stock Dividend: 25,000 shares × 1% × $40 par = $10,000
- Common Stock Dividend: $25,000 - $10,000 = $15,000
- Dividends per Preferred Share: $10,000 / 25,000 shares = $0.40
- Dividends per Common Share: $15,000 / 50,000 shares = $0.30

Year 4:
- Preferred Stock Dividend: 25,000 shares × 1% × $40 par = $10,000
- Common Stock Dividend: $60,000 - $10,000 = $50,000
- Dividends per Preferred Share: $10,000 / 25,000 shares = $0.40
- Dividends per Common Share: $50,000 / 50,000 shares = $1.00

So, the dividends per share on each class of stock for each of the four years are as follows:

Year 1: Preferred Stock = $0.40, Common Stock = $0
Year 2: Preferred Stock = $0.40, Common Stock = $0.01
Year 3: Preferred Stock = $0.40, Common Stock = $0.30
Year 4: Preferred Stock = $0.40, Common Stock = $1.00