Question

Celebrity Inc. has the following shares outstanding at December 31, 2019:

Common shares, $1,500,000 no par value, 10,000 shares issued and outstanding, unlimited number authorized.

Preferred shares, $200,000, $5.00, no par value, non voting shares, 2,000 shares issued and outstanding.

The preferred shares are cumulative and non-participating.

   Dividends have not been declared for the past two years.

   Dividends declared are $30,000.

What is the total common share dividends?

Answer 1

The total common share dividends is calculated as follows:

Given that preferred shares are cumulative and non-participating

Particular	$
Total dividends declared (Given)	30,000
Less: Dividend on prefrence shares for the past two years	(20,000)
( 2,000 shares * $5 * 2 Years)
	$10,000
Less: Dividend on prefrence shares for the current year	(10,000)
( 2,000 shares * $5 * 1 Years (current year)
Total common share dividends	$0

Note:The preferred shares are cumulative and non-participating means the dividend is accumulated for previous years and then paid to preferred stockholders and non-participating means participates only the fixed rate of dividend and not the profit of the company.

The total common share dividends is $0