Question
In each of the following independent cases, it is assumed that the corporation has outstanding 20,000, $ 0.80, preferred shares, with a carrying value of
In each of the following independent cases, it is assumed that the corporation has outstanding 20,000, $ 0.80, preferred shares, with a carrying value of $ 200,000, and 80,000 common shares, with a carrying value of $ 800,000. Although dividends have been paid regularly up to 2017, no dividends were declared in 2018 or 2019. Common shares also get $.80 on base dividends if any amounts remain after paying Preferred divs.
1. At December 31, 2020, the board of directors wants to distribute $ 125,000 in dividends. How much will the preferred shareholders receive if their shares are cumulative and non-participating?
2. At December 31, 2020, the board of directors wants to distribute $ 200,000 in dividends. How much will the preferred shareholders receive if their shares are cumulative and participate at a ratio equal to the paid in capital accounts. up to a maximum of 15% for the current year (plus arrears)?
3. On December 31, 2020, the preferred shareholders received a total of $ 80,000 dividend on their shares, which are cumulative and fully participating. Preferred participate at a ratio equal to the paid in capital accounts. How much money was distributed in total for dividends?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started