Question

The outstanding share capital of Sheng Inc. includes 52,000 shares of $9.60 cumulative preferred and 87,000 common shares, all issued during the first year of operations. During its first four years of operations, the corporation declared and paid the following amounts in dividends:

Year    Total
Dividends Declared
2018    $    0      
2019        527,000      
2020        1,078,000      
2021        527,000      

Required:
Determine the total dividends paid in each year to each class of shareholders. Also determine the total dividends paid to each class over the four years.

Answer 1

			Dividend Paid to Each Class
	Year	Total Dividend Declared	Cumulative Preferred Share	Common Shares
	2018	$                      -	$                    -	$                     -
	2019	$          527,000	$        527,000	$                     -
	2020	$       1,078,000	$        970,600	$         107,400
	2021	$          527,000	$        499,200	$           27,800
	TOTAL	$       2,132,000	$    1,996,800	$         135,200
	Working Notes-
	Preferred Share Dividend due per year			52000*9.6
	Preferred Share Dividend due per year			$         499,200
	2019
	Preferred Share due for 2 years			499200*2
	Preferred Share due for 2 years			$         998,400
	Dividend Declared			$         527,000
	Whole amount will go to preferred share.
	2020
	Preferred Share due for 3 years			499200*3
	Preferred Share due for 3 years			$     1,497,600
	Less : Dividend already given			$         527,000
	Dividend to preferred Shares			$         970,600
	Total Dividend			$     1,078,000
	Dividend to Common Shares			$         107,400
	( 1078000-970600 )
	2021
	Dividend on Preferred Share			499200*1
	Dividend on Preferred Share			$         499,200
	Total Dividend			$         527,000
	Dividend to Common Shares			$           27,800
	( 527000-499200 )