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XYZ's ledger shows the corresponding balances on December 31/20: Preferred shares outstanding: 33,000 shares $ 660,000...

XYZ's ledger shows the corresponding balances on December 31/20:

Preferred shares outstanding: 33,000 shares $ 660,000
Common shares outstanding: 34,000 shares 2,380,000
Retained earnings 989,200

a) Assuming that the directors decide to declare total dividends in the amount of $494,600, 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 $1.40 per share.

b) Assuming that the directors decide to declare total dividends in the amount of $494,600, 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 9% dividend rate on the common shares. Note that one year’s dividends are in arrears on the preferred shares, which pay a dividend of $1.40 per share.

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ekkarill92 answered 2 years ago
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