Dividends on preferred and common stock Yosemite Bike Corp. manufactures mountain bikes and distributes them through retail outlets in California, Oregon, and Washington. Yosemite Bike has declared the following annual dividends over a six-year period ended December 31 of each year: Year 1, $24,000; Year 2, $ 10,000; Year 3, $126,000; Year 4, $100,000; Year 5, $125,000; and Year 6, $125,000. During the entire period, the outstanding stock of the company was composed of 25,000 shares of cumulative preferred 2% stock, $90 par, and 100,000 shares of common stock, $4 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: Year Total Dividends Preferred Dividends Common Dividends Total Per Share Total Per Share Year 1 $ 24,000 Year 2 10,000 Year 3 126,000 Year 4 100,000 Year 5 125,000 Year 6 125,000 2. Determine the average annual dividend per share for each class of stock for the six-year period. 3. Assuming a market price of $100 for the preferred stock and $5 for the common stock, determine the average annual percentage return on initial shareholders’ investment, based on the average annual dividend per share (A) for preferred stock and (B) for common stock.

BuyFind

Corporate Financial Accounting

14th Edition
Carl Warren + 2 others
Publisher: Cengage Learning
ISBN: 9781305653535
BuyFind

Corporate Financial Accounting

14th Edition
Carl Warren + 2 others
Publisher: Cengage Learning
ISBN: 9781305653535

Solutions

Chapter
Section
Chapter 12, Problem 12.1BPR
Textbook Problem

Dividends on preferred and common stock

Yosemite Bike Corp. manufactures mountain bikes and distributes them through retail outlets in California, Oregon, and Washington. Yosemite Bike has declared the following annual dividends over a six-year period ended December 31 of each year: Year 1, $24,000; Year 2, $ 10,000; Year 3, $126,000; Year 4, $100,000; Year 5, $125,000; and Year 6, $125,000. During the entire period, the outstanding stock of the company was composed of 25,000 shares of cumulative preferred 2% stock, $90 par, and 100,000 shares of common stock, $4 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:

Year Total Dividends Preferred Dividends Common Dividends
Total Per Share Total Per Share
Year 1 $ 24,000
Year 2 10,000
Year 3 126,000
Year 4 100,000
Year 5 125,000
Year 6 125,000

2.    Determine the average annual dividend per share for each class of stock for the six-year period.

3.    Assuming a market price of $100 for the preferred stock and $5 for the common stock, determine the average annual percentage return on initial shareholders’ investment, based on the average annual dividend per share (A) for preferred stock and (B) for common stock.

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Chapter 12 Solutions

Corporate Financial Accounting
Ch. 12 - Dividends per share Zero Calories Company has...Ch. 12 - Entries for issuing stock On January 22, Zentric...Ch. 12 - Entries for cash dividends The declaration,...Ch. 12 - Entries for stock dividends Alpine Energy...Ch. 12 - Entries for treasury stock On May 27, Hydro...Ch. 12 - Reporting stockholders equity Using the following...Ch. 12 - Retained earnings statement Noric Cruises Inc....Ch. 12 - Dividends per share Seventy-Two Inc., a developer...Ch. 12 - Dividends per share Lightfoot Inc., a software...Ch. 12 - Entries for issuing par stock On January 22,...Ch. 12 - Entries for issuing no-par stock On May 15, Helena...Ch. 12 - Issuing stock for assets other than cash On...Ch. 12 - Selected stock transactions Alpha Sounds Corp., an...Ch. 12 - Issuing stock Willow Creek Nursery, with an...Ch. 12 - Issuing stock Professional Products Inc., a...Ch. 12 - Entries for cash dividends The declaration,...Ch. 12 - Entries for stock dividends Healthy Life Co. is an...Ch. 12 - Effect of stock split Willeys Grill Restaurant...Ch. 12 - Effect of cash dividend and stock split Indicate...Ch. 12 - Selected dividend transactions, stock split...Ch. 12 - Treasury stock transactions Mystic Lake Inc....Ch. 12 - Treasury stock transactions SprayCo Inc. develops...Ch. 12 - Treasury stock transactions Biscayne Bay Water...Ch. 12 - Reporting paid-in capital The following accounts...Ch. 12 - Stockholders Equity section of balance sheet The...Ch. 12 - Stockholders Equity section of balance sheet...Ch. 12 - Retained earnings statement Sumter Pumps...Ch. 12 - Stockholders Equity section of balance sheet List...Ch. 12 - Statement of stockholders equity The stockholders...Ch. 12 - Dividends on preferred and common stock Pecan...Ch. 12 - Stock transactions for corporate expansion On...Ch. 12 - Stock transactions for corporate expansion On...Ch. 12 - Entries for selected corporate transactions Morrow...Ch. 12 - Entries for selected corporate transactions...Ch. 12 - Dividends on preferred and common stock Yosemite...Ch. 12 - Stock transaction for corporate expansion Pulsar...Ch. 12 - Selected stock transactions Diamondback Welding ...Ch. 12 - Entries for selected corporate transactions Nav-Go...Ch. 12 - Entries for selected corporate transactions West...Ch. 12 - Selected transactions completed by Equinox...Ch. 12 - Continuing Company AnalysisAmazon and Walmart:...Ch. 12 - Pacific Gas and Electric: Earnings per share...Ch. 12 - Caterpillar: Earnings per share Caterpillar Inc....Ch. 12 - BBT and Regions Financial: Earnings per share BBT...Ch. 12 - Ethics In Action Tommy Gunn is a division manager...Ch. 12 - Communication Motion Designs Inc. has paid...

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