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accounting question regarding dividends. How would you calculate cash dividends based on the given info?

Stockholder's equity accounts balances on January 1 2010:

Preferred Stock (8%, $100 par noncumulative, 5,400 shares authorized) $324,000

Common Stock ($5 stated value, 306,000 shares authorized) 1,066,000

Paid-in Capital in Excess of Par Value - Preferred Stock 16,980

Paid-in Capital in Excess of Stated Value - Common Stock 481,380

Retained Earnings 692,170

Treasury Stock - Common (5,400 shares) 43,200

During 2010 the corporation had these transactions and events pertaining to its stockholders' equity.

Feb. 1 Issued 5,400 shares of common stock for $32,400.

Mar. 20 Purchased 1,190 additional shares of common treasury stock at $7 per share.

Oct. 1 Declared a 8% cash dividend on preferred stock, payable November 1.

Nov. 1 Paid the dividend declared on October 1.

Dec. 1 Declared a $0.80 per share cash dividend to common stockholders of record on December

The question I'm stuck on is the Dec. 1 transaction. How do you calculate those dividends?

1 Answer

Relevance
  • buz
    Lv 7
    1 decade ago

    of shares originally issued: 213,200 ($1,066,000 / $5)

    plus: additional shares issued Feb 1 5,400

    less: treasury shares 6,590 (5,400 on 1/1 + 1,190 purchased 3/20)

    equals: eligible shares outstanding 12/1 212,010

    212,010 x $0.80 = $169,608

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