Green Planet Corp. has (a) 5,700 shares of noncumulative 11% preferred stock with a $2 par value and (b) 17,900 shares of common stock with a $0.01 par value. During its first two years of operation, Green Planet declared and paid the following total cash dividends. Compute the dividends paid each year to each of the two classes of stockholders: preferred and common. $ 880 Year 1 total cash dividends Year 2 total cash dividends $1,790 Year 1 Year 2 Noncumulative Common

According to their percentage ownership, preferred stockholders receive the first dividend distribution.
The dividend, though, was not enough to cover the preferred stockholders' owed sum for the first year. No dividend is paid to holders of common stock; instead, the preferred stockholders receive the entire dividend.
The second year's dividend was declared, and it was enough to cover the preferred stockholders' quota while leaving enough for the common stockholders to receive a portion of it.

The preferred stock is noncumulative, so when sufficient amounts are available, no arrears of dividends are taken into consideration.

11% Preferred Non-Cumulative Stock = $11,400 (5,700 times $2)

(17,900 times $0.01) = $179 for common stock.

Distribution of Dividends: First Year:

Preferred shareholders = $880 ($11,400 x 11% = $1,254).

Common stockholders equals $0 ($880 - $880)

Year 2:

Preferred stockholders are equal to $1,254 ($11,400 x 11%).

$1,790 less $1,254 equals $536 for common stockholders.

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Question Completion:

Total Dividend

Year 1 $880

Year 2 $1,790