Answer:
Year 1: Dividend paid to cumulative preferred stock = $51,000; Dividend paid to common stock = 0.
Year 2: Dividend paid to cumulative preferred stock = $93,000; Dividend paid to common stock = $12,000.
Year 3: Dividend paid to cumulative preferred stock = $72,000; Dividend paid common stock = $9,000.
Year 4: Dividend paid to cumulative preferred stock = $72,000; Dividend paid common stock = $48,000.
Explanation:
Year 1
Dividend distributed = $51,000
Cumulative preferred stock dividend payable = 60,000 * $60 * 2% = $72,000
Dividend paid to cumulative preferred stock = $51,000
Carried forward cumulative preferred stock dividend = $72,000 - $51,000 = $21,000
Dividend paid to common stock = 0
Year 2
Dividend distributed = $105,000
Year 2 cumulative preferred stock dividend due = 60,000 * $60 * 2% = $72,000
Cumulative preferred stock dividend payable = Due in year 2 + Carried down from year 1 = $72,000 + $21,000 = $93,000
Dividend paid to cumulative preferred stock = $93,000
Dividend paid to common stock = $105,000 - $93,000 = $12,000
Year 3
Dividend distributed = $81,000
Cumulative preferred stock dividend payable = 60,000 * $60 * 2% = $72,000
Dividend paid to cumulative preferred stock = $72,000
Dividend paid common stock = $81,000 - $72,000 = $9,000
Year 4
Dividend distributed = $120,000
Cumulative preferred stock dividend payable = 60,000 * $60 * 2% = $72,000
Dividend paid to cumulative preferred stock = $72,000
Dividend paid common stock = $120,000 - $72,000 = $48,000
