FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Transcribed Image Text:Yosemite Bike Corp. manufactures mountain bikes and distributes them through retail outlets in California, Oregon, and Washington.
Yosemite Bike has declared the following annual dividends over a six-year period ended December 31 of each year: 20Y1, $23,750;
20Y2, $11,000; 20Y3, $112,750; 20Y4, $97,500; 20Y5, $112,500; and 20Y6, $137,500. During the entire period, the outstanding
stock of the company was composed of 25,000 shares of cumulative preferred 2% stock, $85 par, and 100,000 shares of common
stock, $4 par.
Required:
1. Determine the total dividends and the per-share dividends declared on each class of stock for each of the six years. There were
no dividends in arrears at the beginning of 20Y1. Summarize the data in tabular form. If required, round your per share
answers to two decimal places. If the amount is zero, please enter "0".
Year
20Y1
20Y2
20Y3
20Y4
20Y5
20Y6
Total
Dividends
$23,750
11,000
112,750
97,500
112,500
137,500
Preferred
Dividends
Total
$
%
Preferred
Dividends
Per Share
%
Common
Dividends
Total
2. Determine the average annual dividend per share for each class of stock for the six-year period. Round your answers to two
decimal places.
Average annual dividend for preferred stock
Average annual dividend for common stock
per share
3. Assuming a market price of $100 for the preferred stock and $5 for the common stock, determine 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. Round your answers to two decimal places.
Preferred stock
Common stock
$
$
Common
Dividends
Per Share
per share
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