ACCT Assignment 4

✓ 1. Preferred dividends in 2009: $44,000

Yukon Bike Corp. manufactures mountain bikes and distributes them through retail outlets in Canada, Montana, Idaho, Oregon, and Washington. Yukon Bike Corp. has declared the following annual dividends over a six-year period ending December 31 of each year: 2008, $28,000; 2009, $44,000; 2010, $48,000; 2011, $60,000; 2012, $76,000; and 2013, $140,000. During the entire period, the outstanding stock of the company was composed of 40,000 shares of 2% preferred stock, $65 par, and 50,000 shares of common stock, $1 par.

Instructions

1. Determine 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

2008 $ 28,000

2009 44,000

2010 48,000

2011 60,000

2012 76,000

2013 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 $57.50 and common stock was sold at $5.00 at the beginning of the six-year period, calculate the average annual percentage return on initial shareholders' investment, based on the average annual dividend per share (a) for preferred stock and (b) for common stock.

(Warren 315-316)

Warren, Carl S. Survey of Accounting, 6th Edition. Cengage Learning, 02/2012. VitalBook file.