The outstanding share capital of Pennington Corporation consists of 3,000 shares of $100 par value, 5% preference, and 9,000 shares of $50 par value ordinary.
Assuming that the company has retained earnings of $100,000, all of which is to be paid out in dividends. One year’s dividends are in arrears on the preference shares.
Required: Determine how much each class of shares should receive under each of the following conditions.
1. The preference shares are non-cumulative and non-participating.
2. The preference shares are cumulative and non-participating.
3. The preference shares are non-cumulative and participating.
4. The preference shares are cumulative and participating.