QUESTION 2 (20 MARKS)

The equity section of FDE Corporation at December 31, 2016, included the following:

4% Share capital- preference, $100 par value, cumulative, 10,000

shares authorized, 6,000 shares issued and outstanding. $ 600,000

Share capital-ordinary, $10 par value, 250,000

shares authorized, 180,000 shares issued and outstanding .... 1,800,000

Dividends were not declared on the preference shares in 2016 and are in arrears.

On September 15, 2017, the board of directors of FDE Corporation declared dividends on the preference shares for 2016 and 2017, to shareholders of record on October 1, 2017, payable on October 15, 2017.

Instructions

a) Prepare the entries on the appropriate dates to record the declaration and payment of the cash dividend for Preference Shareholders. (15 Marks) b)If the company wants to pay $160,000 of dividends, what amounts will ordinary shareholders receive? (5 Marks)

b)If the company wants to pay $160,000 of dividends, what amounts will ordinary shareholders receive? (5 Marks)