EX 13-1 Dividends per share

Baxter Inc., a developer of radiology equipment, has stock outstanding as follows: 18,000 shares of cumulative 2%, preferred stock of $75 par, and 40,000 shares of $10 par common. During its first four years of operations, the following amounts were distributed as dividends: first year, $22,500; second year, $28,800; third year, $40,100; fourth year, $77,000. Calculate the dividends per share on each class of stock for each of the four years.


Answer:

 1st Year 2nd Year 3rd Year 4th Year
a. Total dividend declared.................. $ 22,500 $ 28,800 $ 40,100 $ 77,000
 Preferred dividend (current)........... $ 22,500 $ 27,000* $ 27,000 $ 27,000
 Preferred dividend in arrears......... — 1,800 2,700 —
b. Total preferred dividends............... $ 22,500 $ 28,800 $ 29,700 $ 27,000
 Preferred shares outstanding........ ÷ 18,000 ÷ 18,000 ÷ 18,000 ÷ 18,000
 Preferred dividend per share ......... $ 1.25 $ 1.60 $ 1.65 $ 1.50
 *$27,000 = 18,000 shares × $75 × 2%
 Dividend for common shares
 (a. – b.).............................................. $ — $ — $ 10,400 $ 50,000
 Common shares outstanding ........ ÷ 40,000 ÷ 40,000
 Common dividend per share.......... $ 0.26 $ 1.25

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