Lemonds Corp. manufactures mountain bikes and distributes them through retail outlets in Oregon and Washington. Lemonds Corp.

Question:

Lemonds Corp. manufactures mountain bikes and distributes them through retail outlets in Oregon and Washington. Lemonds Corp. has declared the following annual dividends over a six-year period: 2003, $40,000; 2004, $18,000; 2005, $24,000; 2006, $27,000; 2007, $65,000; and 2008, $54,000. During the entire period, the outstanding stock of the company was composed of

25,000 shares of cumulative, 6% preferred stock, $20 par, and 40,000 shares of common stock, $1 par.

Instructions

1. Calculate 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 on January 1, 2003. Summarize the data in tabular form, using the following column headings:


Lemonds Corp. manufactures mountain bikes and distributes them t


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 par and common stock was sold at $8 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 commonstock.

Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on...
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Related Book For  book-img-for-question

Financial Accounting An Integrated Statements Approach

ISBN: 978-0324312119

2nd Edition

Authors: Jonathan E. Duchac, James M. Reeve, Carl S. Warren

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