E15.

23
a)
2018:
Dividend paid = 13,000
Amount due preferred = 2,500x100x6% = 15,000
 Preferred per share = 13,000/2,500 = 5,2
 No common per share
2019:
Dividend paid = 26,000
Amount due preferred = 15,000
Amount due common = 26,000–15,000 = 11,000
 Preferred per share = 15,000/2,500 = 6
 Common per share = 11,000/15,000 = 0.73
2020:
Dividend paid = 57,000
Amount due preferred = 15,000
Amount due common = 42,000
 Preferred per share = 6
 Common per share = 42,000/15,000 = 2.80
2021:
Dividend paid = 76,000
Amount due preferred = 15,000
Amount due common = 61,000
 Preferred per share = 6
 Common per share = 61,000/15,000 = 4.07
b)
2018:
Dividend paid = 13,000
Amount due preferred = 2,500x100x6% = 15,000
 Preferred per share = 13,000/2,500 = 5,2
 No common per share
2019:
Dividend paid = 26,000
Amount due preferred = 17,000
 In arrears = 15,000-13,000 = 2,000
 Current = 15,000
Amount due common = 26,000-17,000 = 9,000
 Preferred per share = 17,000/2,500 = 6.8
 Common per share = 9,000/15,000 = 0.60
2020:
Dividend paid = 57,000
Amount due preferred (current) = 2,500x100x6% = 15,000
Amount due common (current) = 15,000x10x6% = 9,000
Amount available for participation = 57,000-15,000-9,000 = 33,000
Par value of stock that is to participate = 250,000+150,000 = 400,000
Rate of participation = 33,000/400,000 = 8.25%
Participating dividend:
Preferred = 250,000x8.25% = 20,625
Common = 150,000x8.25% = 12,325
 Preferred per share = (20,625+15,000)/2,500 = 14.25
 Common per share = (12,325+9,000)/15,000 = 1.43
2021:
Dividend paid = 76,000
Amount due preferred (current) = 2,500x100x6% = 15,000
Amount due common (current) = 15,000x10x6% = 9,000
Amount available for participation = 76,000-15,000-9,000 = 52,000
Par value of stock that is to participate = 250,000+150,000 = 400,000
Rate of participation = 52,000/400,000 = 13%
Participating dividend:
Preferred = 250,000x13% = 32,500
Common = 150,000x13% = 19,500
 Preferred per share = (32,500+15,000)/2,500 = 19.00
 Common per share = (19,500+9,000)/15,000 = 1.90
Preferred, Preferred, Cumulative,
Noncumulative, and and Fully Participating
Nonparticipating (a) (b)
Year Paid Out Preferred Common Preferred Common
2018 13,000 $5.20 -0- $5.20 -0-
2019 26,000 $6.00 $0.73 $6.80 $0.60
2020 57,000 $6.00 $2.80 $14.25 $1.43
2021 76,000 $6.00 $4.07 $19.00 $1.90