Hi,

How to know there are 5000 shares in arrears. Thanks

Kites Inc. has the following shares outstanding: o Common shares: 100,000 shares o Preferred shares: $3.00, cumulative, 5000 shares o Preferred shares: $3.00, non-cumulative, 3000 shares - Dividends were not paid last year. In the current year, the board declared dividends of $50,000. - How much will each class of shares receive? Solution: - Total dividend declared: $50,000 - Preferred shares (cumulative): o In arrears: ($3 per share, 5,000 shares) = $15,000 o Current year: ($3 per share, 5,000 shares) = $15,000 o Total paid: $30,000 o Remainder: $20,000 - Preferred shares (non-cumulative): o Current year: ($3 per share, 3,000 shares) = $9,000 o Total paid: $9,000 o Remainder: $11,000 - Common shares: o Current year: ($11,000 remainder) o Remainder: $0