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21 November, 07:20

Pug Corporation has 10,000 shares of $10 par common stock outstanding and 20,000 shares of $100 par, 6% noncumulative, nonparticipating preferred stock outstanding. Dividends have not been paid for the past two years. This year, a $150,000 dividend will be paid. What are the dividends per share for preferred and common, respectively?

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  1. 21 November, 09:42
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    Preference dividend per share = $6 per share

    Common dividend per share = $3 per share

    Explanation:

    Annual preference share dividend = 20,000 * $100 * 6% = $120,000

    Preference dividend per share = $120,000/20,000 = $6 per share

    Common stock dividend = $150,000 - $120,000 = $30,000

    Common dividend per share = $30,000/10,000 = $3 per share
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