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# Dividends on Preferred Shares

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A corporation has 100,000 shares of 7 percent cumulative preferred stock and 40,000 shares of common stock outstanding.Par value for each is \$10. no dividends were paid last year, but this year a \$150,000 dividend is paid.

a) how much of this \$150,000 goes to the holders of preferred stock?

b)Assume the same facts as in Question 7, except that the preferred stock is non-cumulative.how much of the \$150,000 now goes to the holders of the common stock?

#### Solution Preview

Answers are in the attached file:
A corporation has 100,000 shares of 7 percent cumulative preferred stock and 40,000 shares of common stock outstanding.Par value for each is \$10. no dividends were paid last year, but this year a \$150,000 dividend is paid.

a) how much of this \$150,000 goes to the holders of preferred stock?

# of Preferred shares= 100,000
Par value of Preferred shares= \$10.00
Dividend (per share) on preferred shares @ 7% = \$0.70 =7.% x ...

#### Solution Summary

Amount of dividends to preferred share holders has been calculated.

\$2.19

## Calculating the par value per share and preferred stock dividend

Assist with DeZurik Corp Stockholders' Equity Balance Sheet.

DeZurik Corp. had the following stockholders' equity section in its June 30, 2013, balance sheet (in thousands, except share and per share amounts):

June 30
(in thousands)
Paid-in capital: 2013
\$4.6 Preferred stock, \$ ? par value, cumulative,

60,000 shares authorized, 21,000 shares issued
and outstanding \$ 1,500

Common stock, \$6 par value, 4,000,000 shares authorized,
900,000 shares issued, 709,000 shares outstanding

Additional paid-in capital on common stock 5,490

Retained earnings
Less: Treasury common stock, at cost, ? shares

Total stockholders' equity \$ 15,360

a. Calculate the par value per share of preferred stock and determine the preferred stock dividend percentage. (Round your answers to 2 decimal places. (e.g., 32.16))

b. Calculate the amount that should be shown on the balance sheet for common stock at June 30, 2013. (Enter your answer in thousands of dollars.)

c. What was the average issue price of common stock shown on the June 30, 2013, balance sheet? (Round your answer to 2 decimal places. (e.g., 32.16))

d. How many shares of treasury stock does DeZurik Corp. own at June 30, 2013?

e. Assume that the treasury shares were purchased for \$18 per share. Calculate the amount that should be shown on the balance sheet for treasury stock at June 30, 2013. (Enter your answer in thousands of dollars.)

f. Calculate the retained earnings balance at June 30, 2013, after you have completed parts (a)−(e). (Hint: Keep in mind that Treasury Stock is a contra account.) (Enter your answer in thousands of dollars.)

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