Reinhardt Furniture Company has 40,000 shares of cumulative preferred 2% stock, $150 par and 100,000 shares of $5 par common stock. The following amounts were distributed as dividends: Year 1 $70,000 Year 2 200,000 Year 3 320,000 Determine the dividends per share for preferred and common stock for each year. If an answer is zero, enter '0'. Round all answers to two decimal places. Year 1 Year 2 Year 3 Preferred stock (Dividends per share) $fill in the blank 1 $fill in the blank 2 $fill in the blank 3 Common stock (Dividends per share) $fill in the blank 4 $fill in the blank 5 $fill in the blank 6

Reinhardt Furniture Company

The dividends per share for preferred and common stock for each year:

                            Year 1               Year 2              Year 3

Preferred             $3.00                $3.00                $3.00

Common stock     $0                    $0.30                $2.00

Explanation:

a) Data and Calculations:

Cumulative preferred 2% stock = 40,000 shares

Cumulative preferred 2% share capital = $6,000,000 ($150 * 40,000)

Common stock = 100,000 shares

Common stock share capital = $500,000 ($5 * 100,000)

Cumulative preferred 2% annual dividend = 2% of $6,000,000 = $120,000

                          Total dividends   Preferred dividends  Common dividends

Amount distributed:

Year 1                    $70,000               $70,000 ($50,000)                       $0

Year 2                  200,000              $170,000                                 $30,000

Year 3                  320,000              $120,000                              $200,000

b) Dividend per share for preferred stock is $120,000/40,000 = $3.00 per annum.  This is the amount of dividend per share because the shares are cumulative.  The holders will always get paid at the next period when enough dividends are declared.  For the common stock, the dividend per share depends on the actual dividends distributed to the holders, divided by 100,000 shares.

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