Dividends 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.
Required:
1.
Ascertain the amount of dividend to be paid to each class of shareholder.
Dividends:
This is the amount of cash distributed to stockholders by a company out its earnings, according to their proportion of shares invested in the company.
Particulars | Preferred stock amount in $ | Common stock amount in $ |
a. | Â | Â |
Preferred dividend | 20,000 | - |
Remainder to common | - | 60,000 |
Total | 20,000 | 60,000 |
 |  |  |
b. | Â | Â |
Dividends in arrears | 40,000 | - |
Current preferred dividend | 20,000 |  |
Remainder to common | - | - |
Total | 60,000 | 20,000 |
 |  |  |
c. | Â | Â |
Dividends in arrears | 20,000 | - |
Current preferred dividend | 20,000 | - |
Common proportional share |
2.
Calculate the dividend yield on the preferred stock and the common stock.
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