# A Dividends per share 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 yea r. BuyFind ### Accounting 27th Edition WARREN + 5 others Publisher: Cengage Learning, ISBN: 9781337272094 BuyFind ### Accounting 27th Edition WARREN + 5 others Publisher: Cengage Learning, ISBN: 9781337272094 #### Solutions Chapter Section Chapter 13, Problem 13.1APE Textbook Problem ## A Dividends per shareReinhardt 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 yea r.

Expert Solution
To determine

Cash dividends: The amount of cash provided by a corporation out of its distributable profits to its shareholders as a return for the amount invested by them is referred as cash dividends.

Common stock: These are the ordinary shares that a corporation issues to the investors in order to raise funds. In return, the investors receive a share of profit from the profits earned by the corporation. The dividend payments are not guaranteed and are paid after the payment made to the preferred stockholders.

Preferred stock: The stock that provides a fixed amount of return (dividend) to its stockholder before paying dividends to common stockholders is referred as preferred stock.

A preferred stock may be cumulative and non-cumulative. A cumulative preferred stock implies that a preferred stockholder is entitled to receive dividends for the current year plus any unpaid dividends of the previous years, before the dividends paid to the common stockholders.

Dividend per share:

Dividend per share represents the amount of dividend paid to each shareholders of the business.

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

### Explanation of Solution

Determine the dividends per share for preferred and common stock for each year.

 Particulars Year 1 Year 2 Year 3 Amount distributed $70,000$200,000 $320,000 Preferred dividend$70,000 $170,000$120,000 Common dividend $0$30,000 $200,000 Dividend per share: Â Â Â Preferred stock (PreferredÂ dividend40,000Â preferenceÂ shares)$1.75 $4.25$3.00 Â Â Â  Common stock (CommonÂ dividend100,000Â commonÂ shares) None $0.30$2.00

Table (1)

Working note:

Calculate the amount to be paid as preferred dividend each year

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