Dividend calculation, can someone explain this to me in great detail?
Below I have typed up the example given by my teacher on how to calculate dividends. I was told to study this carefully and am a little confused on how these calculations were reached. For the year of 2008 in the example, I see that there is a $10,000 difference between the dividends and the total, and that there is a 10,000 total on common stock. The same happenings occur with the years 2012 and 2013. I am just confused as to how to come up with that total number under preferred stock. If someone can work out these calculations in great detail for me, maybe just for a couple of the years.. I would greatly appreciate this. I can sort of see parts of it, but not completely. Thanks!
Lemonds Corp. manufactures mountain bikes and distributes them through retail outlets in Oregon and Washington. Lemonds Corp. has declared the following annual dividends over a six-year period: 2008, $40,000; 2009, $18,000; 2010, $24,000; 2011, $27,000; 2012, $65,000 and 2013, $54,000. During the entire period, the outstanding stock of the company was composed of 25,000 shares of cumulative, non-participating 6% preferred stock, $20 Par; and 40,000 shares of Common Stock $1 Par.
Preferred Stock Common Stock
Year Dividends Total Per Share Arrears Total Per Share
2008 40,000 30,000 1.20 0 10,000 .25
2009 18,000 18,000 .72 12,000 0 0
2010 24,000 24,000 .96 18,000 0 0
2011 27,000 27,000 1.08 21,000 0 0
2012 65,000 51,000 2.04 0 14,000 .35
2013 54,000 30,000 1.20 0 24,000 .60
Comment on Just Looking's post
All right, I think I am following you.. In my teacher's example for year 2012, the total is different than the dividend for the preferred stock. What calculation do I use to get the total? I understand in the first year, but am confused on other years
Comment on Just Looking's post
In year 2012, total is 51,000, while the dividends are 65,000. What calculation is used to find the total? I see that the preferred holders plus the total of common stock equals the dividend total, just don't understand how that 51,000 was computed.