Herr Fashions has 2,000 shares of 7%, 100 par value preference shares outstanding at December 31, 2020.

Question:

Herr Fashions has 2,000 shares of 7%, €100 par value preference shares outstanding at December 31, 2020. At December 31, 2020, the company declared a €110,000 cash dividend.

Determine the dividend paid to preference shareholders and ordinary shareholders under each of the following scenarios.
1. The preference shares are non-cumulative, and the company has not missed any dividends in previous years.
2. The preference shares are non-cumulative, and the company did not pay a dividend in each of the two previous years.
3. The preference shares are cumulative, and the company did not pay a dividend in each of the two previous years.

Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their... Par Value
Par value is the face value of a bond. Par value is important for a bond or fixed-income instrument because it determines its maturity value as well as the dollar value of coupon payments. The market price of a bond may be above or below par,...

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