Preferred Stock and Common Stock Dividend Allocations

[@DinoLik13]

Thank you for making this video. This is a huge part on my upcoming exam and you are the only one that clearly explained this concept.

[@allkristiningram]

You're welcome Dino! I'm so glad you found my video helpful in your exam preparation. Good luck on your test!

[@aab9764]

Very thankful! Just spend 2.5 hours trying to get help from my college, which was impossible. I could have saved myself all that time looking at this first!!!!! And I especially like how calmly and slow you explain this. Awesome! I have read the book over and over and could not understand this.

[@allkristiningram]

Glad it helped!

[@godfreyanyim6501]

Kristine, this is a fantastic tutoring video you've put together. I usually don't leave comments on the web, but I couldn't do that this time. I love your vocal rate and speed, and your voice keeps me focusing. Thank you :)

[@allkristiningram]

You're welcome! Thanks for commenting!

[@arthurvalencia2970]

So thankful I found your video. You're a Lifesaver !!!!

[@allkristiningram]

Arthur Valencia I'm so glad you found it helpful. Thanks for your comment!

[@veronicahudon9055]

I'm not an accounting major, but I want to pass my class. This is a great video! Thank you!!

[@allkristiningram]

You're welcome. Thanks for commenting. You can find more on my website AccountingInFocus.com

[@rebeccathomson6722]

I'm an accounting major and this video made it really clear how the two different stocks work. Thank you

[@allkristiningram]

You're welcome. I'm glad it helped!

[@akamaterasu]

An extremely helpful video. Very well explained.

[@allkristiningram]

+akamaterasu Thank you!

[@akamaterasu]

No problem! I got this question wrong on my midterm but now when I see it again on the later exams, I will get it right.

[@sneakerlover1119]

You're a life saver! Have an exam tomorrow and Monday and this helped a lot. Thanks you!

[@allkristiningram]

+sneakerlover1119 You're welcome! I'm so glad I could help!

[@JustinCassaday]

Thanks so much. I have an exam in the morning and didn't get this at all until I watched your example.

[@allkristiningram]

+JC GimmeDaBeat You're welcome! I hope your exam went well.

[@anabels923]

thank you thank you thank you!!! I'm taking acct class right now and i missed this part of the lecture. I'm so lucky to find this video and now i have confident to accomplish my assignment :)!!

[@allkristiningram]

qiucen song So glad you found the video helpful.

[@jsathish1990able]

simple and clean. I appreciate it. thanks Kristin.

[@allkristiningram]

+barney133 Glad you found the video helpful! Thanks for commenting!

[@Adrian-cn5rk]

A HUGE THANK YOU, this made no sense until now

[@allkristiningram]

Your welcome! So glad it helped.

[@nikkibrumfield8667]

Thank you Kristin the light just click ON. I was not understanding the cumulative vs non-cumulative. You have explained it thoroughly. Now I can move on to the next Chapter (just in time for my upcoming exam.. #Lifesaver

[@stephaniecruz6115]

You are amazing! I was having a rough time getting this and you made it so clear! Thank you!!!

[@allkristiningram]

You're welcome. Thanks so much for your comment.

[@LinhNguyen-fy3di]

Thanks for your video . It helps me a lot to solve the homework and improve my knowledge to prepare for the final exam :D

[@alyssaneudorf5591]

Thank you so much for your videos. I am taking business administration with a major in accounitng diploma through distance education and your videos have been so helpful in understanding. The textbook is not always the most helpful when trying to complete assignments. Thank you so much!

[@allkristiningram]

Thank you for your very nice comment. I'm so glad I could help.

[@tashekaharris5032]

Thank you! What a relief. It's easier than what I was taught.

[@allkristiningram]

You're welcome. I'm so glad I could help! Thanks for commenting!

[@Nina-me6bu]

I was lost and you explained it so clearly !! Thank you soooooo much !!!!!!!!!!!!! 😁

[@allkristiningram]

You're welcome!

[@saraabbasi1365]

Thank you. Great!.......I understand that way you explained much better than my professor. Now I know what she said in class well.

[@allkristiningram]

+Sara Abbasi awesome! So glad I could help!

[@steldalope7754]

I've watched other videos but this one helped me the most, thank you so much!

[@allkristiningram]

You're welcome. Thank you for commenting!

[@henryli6165]

Thank you so much! This is exactly what I needed.

[@allkristiningram]

HaoXuan Li You're welcome. Glad I could help!

[@moeky1luv]

Explained this soooo well! Thank you! My obly question that I am stuck on is...how do I calculate the problems in the years where I then owe nothing? I hope this makes sense

[@allkristiningram]

Nakeyshia T.M If you have cumulative preferred stock, you will always make a payment to the preferred shareholders even if it is just for the current year's dividends. If no dividend is paid, that is when you need to keep track of how much is in arrears so you can pay that out the next time a dividend is paid. The calculation for the amount of dividends to the preferrred shareholders is always the same. Number of shares of preferred stock outstanding X Par value of preferred share X % dividend. So if you have 1,000 shares of $100 par value, 8% preferred stock, the preferred dividend would be: 1,000 x $100 x 7%= $7000. I hope that answers your question. If you need further clarification or I didn't understand your question correctly, please let me know.

[@moeky1luv]

That makes alot of sense and thank you for that clarity! I do have another question as well if for example if the: preferred dividends is 45,000 and the year total dividends is 126,000. Do I then take 45,000 out for preferred dividends and place the rest which is 81,000 into the common dividends box? I hope this makes sense. Thank you again

[@allkristiningram]

Nakeyshia T.M As long as there are no dividends in arrears (from previous years) owed to the preferred shareholders, then yes, that is correct. Total dividends - preferred dividends = common dividends.

[@cnoodle5]

Thank you for posting this! I am looking forward to your videos. I just started accounting 202, managerial accounting- and my instructor doesn't exactly explain how to do anything.

[@allkristiningram]

+cnoodle5 You're welcome. You might also want to check out my website, accountinginfocus.com. I cover most of the managerial topics covered in the course. If I can be of any assistance, feel free to reach out to me.

[@nhoss5278]

Thank you, very much. It helped!

[@allkristiningram]

+N hoss You're welcome. So glad I could help! Thanks for commenting.

[@joemunoz1354]

appreciate the description. really helped me

[@allkristiningram]

+Joe Munoz glad I could help! Thanks for commenting.

[@Jenoami]

Thank u so look much.. I have a perfect understanding on how to calculate the dividend given out to preferred and common

[@allkristiningram]

Jay P. You're welcome! I'm glad you found the video helpful.

[@ric1241]

Thank you so much for sharing your knowledge to us. It helps me a lot coz I'm going to do a reporting about this topic in my major subject. I'm from the Philippines and a financial management student.

[@allkristiningram]

I'm so glad I could help. Thanks for leaving a comment. Good luck with your report.

[@jonathanlarco2453]

Thanks for the video. Any instruction on participating dividends? Trying to find a good explanation.

[@destineycontreras4697]

Kristin thank you for sharing this! This was very helpful. Do you have any other accounting videos?

[@allkristiningram]

+Destiney Contreras I have over 60 videos on my channel. You can also check out my website: accountinginfocus.com

[@PuNkRkR13]

I've shared your page on my FB page. Thanks for all videos!!

[@allkristiningram]

Raquel Reyes Thank you for sharing my page. I really appreciate it. So glad you found my videos helpful.

[@TripperTrail]

How would I calculate the dividend per share?

[@allkristiningram]

+Richard Williams divide the total dividend by the number of shares outstanding. Outstanding shares = issued shares - treasury. Treasury shares do not earn a dividend.

[@leerashiduy3512]

Thanks for the video. .. now i can do my homework with the same problem you were solving with but in different amounts

[@allkristiningram]

+Lee Rashid Uy I'm glad I was able to help! Good luck finishing your homework. Thanks for commenting.

[@katie3298]

thank you!! you did a great job explaining this

[@ma.elizabethfarenas9531]

It's easily understood. Thank you

[@sarahpope4728]

So helpful!!! Thank you for posting this.

[@allkristiningram]

+Sarah Pope you're welcome. I am so glad I could help. Thanks for commenting!

[@shandawallace]

Thank you this video was a great help...

[@allkristiningram]

Lashunda Wallace You're welcome. I'm so glad you found it helpful!

[@connorkehoe3154]

My exam tomorrow thanks you!!!

[@allkristiningram]

+Connor Kehoe You're welcome! Good luck with your exam!

[@mitchwacksit]

perfect explanation for me thanks.

[@lisalawson7160]

Where does the 100,000 shares of$1 par value common stock come into play? is there another video on that and that part of the question is there to throw you off or did I miss something? Thank you, even though I am still a little confused this is much more understandable to me!

[@allkristiningram]

Check out my website Accountinginfocus.com. I have a full common stock explanation there.

[@supamom0609]

You are awesome! Thank you! The book I have does not break down the equations.

[@allkristiningram]

+Nikita Carter You're welcome. Thanks for commenting. I appreciate it!

[@JAFFER3657]

Brilliant Explanation!

[@allkristiningram]

Thank you!

[@raamk2270]

Thanks for this video. Clarified. Can you help me understand how are preferred shares allocated. Does a common shareholder have access to prefered shares?

[@allkristiningram]

Maybe, it depends on the way the preferred shares are offered.

[@chessnut9744]

Thanks a log. I thought that the dividends given for preferred stock is fixed? So why isn't the dividend the same for each year?

[@allkristiningram]

The reason it changes is because there is not enough cash to pay them so they are paying multiple years in arrears.

[@Ryan-xb1ry]

Very clear! thank you so much!

[@mohammedalhusaini6079]

thank you so much , you are great teacher !

[@allkristiningram]

Thank you. I appreciate that.

[@jasmineau-yeung2979]

Thank you so much for your video, it was so helpful!

[@allkristiningram]

You're welcome!

[@abhishekpokhrel9658]

Do you have a video for Participating on both Cumulative and Non-cumulative

[@allkristiningram]

Sorry I do not.

[@themixedherb6578]

Thank you very much for your explanation it was useful and help out :)

[@hT-pf2pn]

Finally I get it, Thank you

[@allkristiningram]

You're welcome! Glad I could help!

[@crash421000]

Long overdue but Thank you, maam

[@allkristiningram]

You're welcome!

[@F3R2049]

it helped me a lot... thank you.

[@allkristiningram]

+Prolawn Asuncion You're welcome! So glad I could help!

[@grazi4u]

when would we have to use the 100,000 shares of $1 par value common stock? Like it is not important as far as knowing how to do preferred stock and common stock dividends?

[@allkristiningram]

In this example, it is extra information unless you need to calculate the common stock dividend per share.

[@wjeantravel]

What does the journal entry look like for this example?

[@allkristiningram]

The journal entry would be the same as the entries found here: kzbin.info/www/bejne/rpTKmmeerZKBfK8

[@tanielatuihalafatai3652]

Thank you! This was awesome!

[@allkristiningram]

+Taniela Tuihalafatai Thank you. I am so glad it was helpful. Thank you for commenting!

[@joehgilles8313]

Thanks a lot. Good stuff.

[@allkristiningram]

+joeh gilles You're welcome. Glad I could help!

[@yuanche2]

Thank you so much for your video!

[@allkristiningram]

+Lance Yuan you're welcome. Thanks for commenting!

[@robetopantinople8002]

How about the participating & non participating preference share its affect the dividend declaration?

[@allkristiningram]

Preference should not make a difference unless the stocks are treated differently for dividend distributions. That would need to be clearly stated.

[@strongmind6584]

in each series or round, how many common shares can be open to each investor? is there a number or even a limit to these?

[@allkristiningram]

The only limit is the number of shares authorized in the charter.

[@kevinsharadin765]

Very good video. i'm lost on the 2013 part toward the end. I don't get how you got $25,000 in cummulative part.

[@allkristiningram]

+KEVIN SHARADIN the $25,000 is the 2013 dividend plus the amount in arrears.

[@pedrogalindo2580]

If you wanted to find the per share value how would you do that?

[@allkristiningram]

+Pedro Galindo you would take the total stockholder's equity less any preferred equity and divide that by the number of shares outstanding.

[@sarahgul8567]

Thank you so much, Kristin. :)

[@allkristiningram]

+Sarah Gul You're welcome! So glad I could help!

[@sarahgul8567]

+Kristin Ingram :)

[@TheCutecuterose]

thank you this really helped

[@allkristiningram]

You're welcome. I'm glad I could help!

[@purpledonatello]

got a question? why didn't you subtract 10,000 from 40,000 in year 2013? i dont get it?

[@allkristiningram]

***** Cumulative preferred stock earns the dividend even if it is not paid. If the dividend is not paid in full, it is called "dividends in arrears." In 2013, there are $15,000 worth of dividends in arrears ($5,000 from 2011 and $10,000 from 2012). Therefore, when the $40,000 was declared in 2013: $5,000 went to pay the dividends in arrears for 2011 $10,000 went to pay the dividends in arrears for 2012 $10,000 went to pay the dividend for 2013. I hope the explanation makes sense. If not, please ask more questions.

[@purpledonatello]

Kristin Ingram confusing still, but how about this. in 2013 the company has enough dividends(40,000) to pay off rest of the "owed" arrears(15,000) and thats why collectivly arrears stopped? right? arrears would not kept on going because the company had enough? if that current year 2013 lets say has amount of 15,000 then arrears would be 5,000 then what happens? would collective arrears would be 20,000? i think im getting it...

[@allkristiningram]

***** Do you mean the dividend declared was $15,000 for 2013? That would pay off the dividends in arrears for 2011 and 2012, but the 2013 dividend due to the preferred shareholders is an additional $10,000. Arrears $15,000 current $10,000 Paid ($15,000) Amount due $10,000

[@AquaaLeo]

Thank you very much, that helped me alot

[@allkristiningram]

Glad I could help!

[@tobennauba4055]

please do one for payroll taxes

[@SparkleAndLearn]

You are an amazing individual. thank you so much! (;

[@allkristiningram]

+Soul thank you for the lovely comment. I'm so glad I was able to help!

[@candycandyfu]

Hi can u provide the entries for preferred stock cumulative, issuance and

[@allkristiningram]

+Rita Hong check out the video on common stock issuance. Preferred stock is done exactly the same way.

[@brandonrehak9776]

what if is 80,000 at 4% 100$ par and declared a $21,000 cash dividend? would preferred be 21k?

[@allkristiningram]

80,000 shares? Preferred would take up all the cash and you would have a huge dividend in arrears.

[@rayandojohnson9101]

great video

[@allkristiningram]

+Rayando Johnson Thank you!

[@pbandino1]

Hello I have a question. you have two question on this problem what happen with the common stock, 100,000 shares $1, par value common stock. I have seen this type of exercises and now capture my attention, because I have an exercise Company declared a$20,000 cash dividend to shareholders 5,000 shares of $15-par, 10% preferred stock noncumulative 10,000 shares of $20-par common stock How much will the preferred and common stockholders receive on the date of payment? 5,000 *$15 * 10%= 7,500 Preferred $7,500 common $12,500 The calculation for the common stock ???

[@allkristiningram]

The rest of the money goes to the common shareholders. If there are 10,000 shares of common stock then each share would receive $12,500/10,000 shares or $1.25 per share. The preferred shareholders get 10% of $15 or $1.50 per share.

[@pbandino1]

That's why I ask you, you didn't calculate the part of the common stock.You give the rest from preferred. So in my work Preferred $7,500 Common $12,500 + 10,000 share $20 I'm confused

[@allkristiningram]

The total dividend amount is given. Whatever is left over goes to the common shareholders. It's not really a calculation. They just get whatever the preferred shareholders don't take.

[@axaygiri]

thanks! we use pearson's accounting principles vol 2, has a very subtle and unnecessarily difficult way to describe. again thank you for making my life less miserable haha

[@allkristiningram]

+Axaygiri Goswami Glad I could help! Thanks for commenting!

[@robertaghazarian6849]

Great help.(thanks)

[@allkristiningram]

+Robert Aghazarian you're welcome! Thanks for leaving a comment. I appreciate it.

[@Gynuyinee]

Well Done (clapping) Now I understand it.

[@allkristiningram]

+B Raq Thank you. So glad I could help. Thanks for commenting.

[@user-uu5yo9mc2o]

oh my goodness thank you so much

[@allkristiningram]

You're welcome!

[@justnobody07.]

pls answer may question. what if in 5 years and cummulative. 2010 loss 2011 loss 2012 loss 2013 income 2014 income. if it is cummulative am I going to "X" all the year or just the year that it has an income?

[@allkristiningram]

+summer summerr the dividends are not tied to profit or loss, just on dividends paid. Therefore, you would calculate the dividends in arrears for all years they are not paid.

[@justnobody07.]

Kristin Ingram yes maam. it says in the problem that the company for the first time plans to declare cash dividend it has not paid a cash or dividend before. the given is 2008 300k loss 2009 200k loss 2010 100k loss. and 2011 350k income and 2012 1.250k income. it is 10% cummulative and fully participating pref.share par 100 per share authorized issued/outstanding 5000shares. so the calculation is?is it (500,000 x 10% x 5 years?) since they are not paid for 5 years maam? sorry for inconvenience maam but i need help.

[@allkristiningram]

+summer summerr yes, your calculation is correct.

[@justnobody07.]

Kristin Ingram maam?thank you so much. :')

[@JokersAce0]

Thanks

[@ataquraan4879]

Thank You!!!

[@IvanIvanov-wd4mu]

Thank you!

[@allkristiningram]

You're welcome!

[@joshualibo-on8175]

Thank you so much.

[@allkristiningram]

+Joshua Libo-on you're welcome! Glad I could help!

[@kathlynlarisma7835]

Thankyou so much

[@allkristiningram]

You're welcome!

[@mikelawy]

why did they get $10000 in 2012 cummulative preffered

[@allkristiningram]

+mikelawy in 2012, they received 0 for cumulative preferred

[@allkristiningram]

+mikelawy the 2013 noncummulative was $10,000.

[@trustee0129]

explain common and prefered stock

[@allkristiningram]

Here is my post with explanations of the two types of stock: accountinginfocus.com/financial-accounting/equity-financial-accounting/stock-terminology/

[@jonathank3759]

you da best

[@allkristiningram]

Thanks! You're pretty awesome yourself.

[@BangMaster96]

Way Easier than my shitty professor tried to explain my college, CSUF, needs to fire their accounting department and hire some one better who can actually teach students thanks for the video

[@allkristiningram]

+Sunny shah You're welcome. So glad I could help. Sorry your professor wasn't able to help you.

[@BangMaster96]

Kristin Ingram Haha lol, screw my professor

[@petercross1844]

why do they give a percentage and a par value, y not just give the multiplication of the two

[@allkristiningram]

Because you also have to factor in the number of shares outstanding.

[@hT-pf2pn]

Kohler Corporation reports the following components of stockholders’ equity on December 31, 2015: Common stock-$10 par value, 100,000 shares authorized, 40,000 shares issued and outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . $400,000 Paid-in capital in excess of par value, common stock . . . . . . . . . . . . . . . . . 60,000 Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 270,000 Total stockholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $730,000 In year 2016, the following transactions affected its stockholders’ equity accounts. Jan. 1 Purchased 4,000 shares of its own stock at $20 cash per share. Jan. 5 D irectors declared a $2 per share cash dividend payable on Feb. 28 to the Feb. 5 stockholders of record. Feb. 28 Paid the dividend declared on January 5. July 6 Sold 1,500 of its treasury shares at $24 cash per share. Aug. 22 Sold 2,500 of its treasury shares at $17 cash per share. Sept. 5 Directors declared a $2 per share cash dividend payable on October 28 to the September 25 stockholders of record. Oct. 28 Paid the dividend declared on September 5. Dec. 31 Closed the $388,000 credit balance (from net income) in the Income Summary account to Retained Earnings. I did not understand the journal entry on Jan 5 ?

[@allkristiningram]

It's important to understand the three dates: declaration date, recording date, and payment date. Jan 5 is the declaration date, when the liability and dividend are recorded.

[@ski34able]

Thank you!!!

[@allkristiningram]

Thanks!