Pecan Theatre Inc. owns and operates movie theaters throughout Florida and Georgia. Pecan Theatre has declared the following annual dividends over a six-year period: Year 1, $80,000; Year 2, $90,000; Year 3, $150,000; Year 4, $150,000; Year 5, $160,000; and Year 6, $180,000. During the entire period ended December 31 of each year, the outstand- ing stock of the company was composed of 250,000 shares of cumulative, preferred 2% stock, $20 par, and 500,000 shares of common stock, $15 par. Instructions 1. Determine the total dividends and the per-share dividends declared on each class of stock for each of the six years. There were no dividends in arrears at the beginning of Year 1. Summarize the data in tabular form, using the following column headings: Preferred Dividends Common Dividends Total Dividends Per Share Year Total Per Share Total $ 80,000 Year 1 Year 2 90,000 150,000 Year 3 150,000 Year 4 Year 5 160,000 Year 6 180,000 2. Determine the average annual dividend per share for each class of stock for the six- year period. 3. Assuming a market price per share of $25.00 for the preferred stock and $17.50 for the common stock, determine the average annual percentage return on initial share- holders' investment, based on the average annual dividend per share (a) for preferred stock and (b) for common stock.
Pecan Theatre Inc. owns and operates movie theaters throughout Florida and Georgia. Pecan Theatre has declared the following annual dividends over a six-year period: Year 1, $80,000; Year 2, $90,000; Year 3, $150,000; Year 4, $150,000; Year 5, $160,000; and Year 6, $180,000. During the entire period ended December 31 of each year, the outstand- ing stock of the company was composed of 250,000 shares of cumulative, preferred 2% stock, $20 par, and 500,000 shares of common stock, $15 par. Instructions 1. Determine the total dividends and the per-share dividends declared on each class of stock for each of the six years. There were no dividends in arrears at the beginning of Year 1. Summarize the data in tabular form, using the following column headings: Preferred Dividends Common Dividends Total Dividends Per Share Year Total Per Share Total $ 80,000 Year 1 Year 2 90,000 150,000 Year 3 150,000 Year 4 Year 5 160,000 Year 6 180,000 2. Determine the average annual dividend per share for each class of stock for the six- year period. 3. Assuming a market price per share of $25.00 for the preferred stock and $17.50 for the common stock, determine the average annual percentage return on initial share- holders' investment, based on the average annual dividend per share (a) for preferred stock and (b) for common stock.
Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Chapter14: Statement Of Cash Flows
Section: Chapter Questions
Problem 25BEB
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Transcribed Image Text:Pecan Theatre Inc. owns and operates movie theaters throughout Florida and
Georgia. Pecan Theatre has declared the following annual dividends over a six-year period:
Year 1, $80,000; Year 2, $90,000; Year 3, $150,000; Year 4, $150,000; Year 5, $160,000; and
Year 6, $180,000. During the entire period ended December 31 of each year, the outstand-
ing stock of the company was composed of 250,000 shares of cumulative, preferred 2%
stock, $20 par, and 500,000 shares of common stock, $15 par.
Instructions
1. Determine the total dividends and the per-share dividends declared on each class of
stock for each of the six years. There were no dividends in arrears at the beginning
of Year 1. Summarize the data in tabular form, using the following column headings:
Preferred Dividends
Common Dividends
Total
Dividends
Per Share
Year
Total
Per Share
Total
$ 80,000
Year 1
Year 2
90,000
150,000
Year 3
150,000
Year 4
Year 5
160,000
Year 6
180,000
2. Determine the average annual dividend per share for each class of stock for the six-
year period.
3. Assuming a market price per share of $25.00 for the preferred stock and $17.50 for
the common stock, determine the average annual percentage return on initial share-
holders' investment, based on the average annual dividend per share (a) for preferred
stock and (b) for common stock.
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