Lightfoot Inc., a software development firm, has stock outstanding as follows: 40,000 shares of cumulative preferred 1% stock, $125 par,

Lightfoot Inc., a software development firm, has stock outstanding as follows: 40,000 shares of cumulative preferred 1% stock, $125 par, and 100,000 shares of $150 par common. During its first four years of operations, the following amounts were distributed as dividends: first year, $36,000; second year, $58,000; third year, $75,000; fourth year, $124,000. Calculate the dividends per share on each class of stock for each of the four years.


Answer:















1st Year 2nd Year 3rd Year 4th Year
a. Total dividend declared…………… $36,000 $58,000 $75,000 $124,000
Preferred dividend (current)……… $36,000 $44,000* $50,000 $ 50,000
Preferred dividend in arrears…… — 14,000 6,000 —
b. Total preferred dividends…………
Preferred shares outstanding……
$36,000
÷ 40,000
$58,000
÷ 40,000
$56,000
÷ 40,000
$ 50,000
÷ 40,000
Preferred dividend per share……… $ 0.90 $ 1.45 $ 1.40 $ 1.25
* $44,000 = $58,000 – $14,000
Dividend for common shares
(a. – b.)……………………………… $ — $ — $ 19,000 $ 74,000
Common shares outstanding……… ÷ 100,000 ÷ 100,000
Common dividend per share…… $ 0.19 $ 0.74