Acc 123-Assuming that the directors decide to declare

Acc 123-Assuming that the directors decide to declare

Subject: Business    / Accounting
Question
Cumulative and fully participating
Assuming that the directors decide to declare total dividends in the amount of $509,800, determine how much each class of shares should receive if the preferred shares are cumulative and fully participating. Note that one year’s dividends are in arrears on the preferred shares, which pay a dividend of $1.00 per share.

Non cumulative and non participating
Assuming that the directors decide to declare total dividends in the amount of $509,800, determine how much each class of shares should receive if the preferred shares are non–cumulative and are participating in distributions in excess of a 7.00% dividend rate on the common shares. Note that one year’s dividends are in arrears on the preferred shares, which pay a dividend of $1.00 per share.

Relevant Information:

Preferred shares outstanding: 19,000 shares        $    380,000
Common shares outstanding: 38,000 shares            2,736,000
Retained earnings

1,019,600