QUESTION 4

1. On December 31, 2020, the shareholders' equity of Karmin Corporation shows the following:

   Preferred shares$ 6, no par, 8,000 shares outstanding...................... $ 400,000

   Common sharesno par, 60,000 shares outstanding.......................... 800,000

   Retained earnings.............................................................................. 240,000

   Total shareholders' equity.................................................................. $ 1,440,000

   Assume that preferred dividends were last paid on December 31, 2018, and that all of the company's retained earnings are to be paid out in dividends on December 31, 2020.

   Instruction

   1. If the preferred shares are cumulative and fully participating, how much should each class of shares receive?