Maria Incs share capital consists of:

1. 2,000 preferred shares outstanding, $6.50 per share dividend, and a $100 stated (par) value;

2. 5,000 common shares outstanding for which $300,000 was received.

Assume that $88,000 is available for dividend distribution. Preferred shares have not been paid for the two Preceding years.

Required:

For each situation below, state how much of the $88,000 will be distributed to each share class.

1. Pref erred shares are cumulative and non-participating (3 mark)
2. Pref erred shares are cumulative and participating (4 marks)