Dividends Per Share Seventy-Two Inc., a developer of radiology equipment, has stock outstanding as follows: 60,000 shares of cumulative preferred 2% stock, $60 par and 300,000 shares of $20 par common. During its first four years of operations, the following amounts were distributed as dividends: first year, $51,000; second year, $105,000; third year, $81,000; fourth year, $120,000.

Determine the dividends per share on each class of stock for each of the four years. Round your answers to two decimal places. If no dividends are paid in a given year, enter "0".

Seventy-Two Inc.

Dividends Per Share:

Dividend per share         Year 1         Year 2         Year 3         Year 4

Cumulative preferred     $1.20           $1.20           $1.20           $1.20

Common stock                $0              $0.04           $0.03          $0.16

Explanation:

a) Data and Calculations:

Outstanding stocks:

Cumulative Preferred 2% stock = 60,000

Cumulative Preferred par value = $60

Total value of cumulative preferred stock = $3,600,000

Cumulative preferred dividend (annual) = $72,000 ($3,600,000 * 2%)

Dividends payout             Year 1         Year 2         Year 3         Year 4

Dividends distributed:

Cumulative preferred      $72,000   $72,000     $72,000       $72,000

Dividends paid                    51,000     93,000       72,000          72,000

Outstanding dividends      21,000     0                 0

Common stock                   $0          $12,000       $9,000       $48,000

Total dividend distributed $51,000 $105,000    $81,000     $120,000

                     Cumulative preferred stock        Common stock

Year 1:             $1.20 ($72,000/60,000)             $0 ($0/300,000)

Year 2:             $1.20 ($72,000/60,000)             $0.04 ($12,000/300,000)

Year 3:             $1.20 ($72,000/60,000)             $0.03 ($9,000/300,000)

Year 4:             $1.20 ($72,000/60,000)             $0.16 ($48,000/300,000)

Dividend per share = Dividend/No. of outstanding shares (each class)

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