Andrews Company has $80,000 available to pay dividends. It has 2,000 shares of 10%, $100 par, preferred stock and 30,000 shares of $10 par common stock outstanding. The preferred stock is selling for $125 per share, and the common stock is selling for $20 per share.
1. Determine the amount of dividends to be paid to each class of shareholder for each of the following independent assumptions. If an amount box required no entry, leave it blank.
a. Preferred stock is nonparticipating and noncumulative.
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Schedule of dividends to be paid
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b. Preferred stock is nonparticipating and cumulative. Preferred dividends are 2 years in arrears at the beginning of the year.
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Schedule of dividends to be paid
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Current preferred dividend
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c. Preferred stock is fully participating and cumulative. Preferred dividends are 1 year in arrears at the beginning of the year.
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Schedule of dividends to be paid
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Current preferred dividends
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Common proportional share
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2. For 1(a), compute the dividend yield on the preferred stock and the common stock.
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Dividend yield
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Preferred stock
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Common stock
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