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Financial and Managerial Accounting
PR11-1A Dividends on Preferred and Common Stock
Olympic Theatre Inc. Owns and operates theaters throughout Texas and California.
Olympic Theatre has declared the following annual dividends over a six-year period: 2003, $21,000; 2004, $50,000; 2005, $15,000; 2006, $80,000; 2007, $90,000; and 2008, $140,000.
During the entire period, the outstanding stock of the company was composed of 10,000 shares of 4% preferred stock, $75 par, and 100,000 shares of common stock, $10 par
Instructions: (in excel)
1. Calculate the total dividends and the per-share dividends declared on each class of stock for each of the six years. Summarize the data in tabular form, using the following column headings.
Preferred Dividends Common Dividends
Year Total Dividends Total Per Share Total Per Share
2003 21,000
2004 50,000
2005 15,000
2006 80,000
2007 90,000
2008 140,000
2. Calculate the average annual dividend per share for each class of stock for the six-year period.
3. Assuming that the preferred stock was sold at $80 and common stock was sold at par at the beginning of the six-year period, calculate the average annual percentage return on initial shareholders’ investment, based on the average annual dividends per share (a) for preferred stock and (b) for common stock.
PR11-1A Dividends on Preferred and Common Stock
Olympic Theatre Inc. Owns and operates theaters throughout Texas and California.
Olympic Theatre has declared the following annual dividends over a six-year period: 2003, $21,000; 2004, $50,000; 2005, $15,000; 2006, $80,000; 2007, $90,000; and 2008, $140,000.
During the entire period, the outstanding stock of the company was composed of 10,000 shares of 4% preferred stock, $75 par, and 100,000 shares of common stock, $10 par
Instructions: (in excel)
1. Calculate the total dividends and the per-share dividends declared on each class of stock for each of the six years. Summarize the data in tabular form, using the following column headings.
Preferred Dividends Common Dividends
Year Total Dividends Total Per Share Total Per Share
2003 21,000
2004 50,000
2005 15,000
2006 80,000
2007 90,000
2008 140,000
2. Calculate the average annual dividend per share for each class of stock for the six-year period.
3. Assuming that the preferred stock was sold at $80 and common stock was sold at par at the beginning of the six-year period, calculate the average annual percentage return on initial shareholders’ investment, based on the average annual dividends per share (a) for preferred stock and (b) for common stock.