Problem 4 (Allocation of Cash Dividends to Preference and Ordinary Shareholders) The Company has the same...

Problem 4 (Allocation of Cash Dividends to Preference and Ordinary Shareholders)

The Company has the same capital structure (except for retained earnings) for the past five year, see details below:

6% Preference Share Capital, 80,000 shares issued and outstanding, P 50 par P4,000,000

Ordinary Share Capital, 200,000 shares issued and outstanding, P 30 par 6,000,000

Retained Earnings 5,000,000

No dividends were paid prior to 2020 for two years. On December 10, 2020, the Company declared P 1,500,000 as cash dividends to shareholders of record of December 21, 2020, payable on January 5, 2021.

Requirements:

Prepare all the necessary journal entries to record the dividend transactions.
Allocate the dividends between ordinary shareholders and preference shareholders if:

Case A. Preference share capital is NON-CUMULATIVE and NON-PARTICIPATING

Case B. Preference share capital is CUMULATIVE and NON-PARTICIPATING

Case C. Preference share capital is NON-CUMULATIVE and FULLY PARTICIPATING

Case D. Preference share capital is NON-CUMULATIVE and PARTICIPATING UP TO ADDITIONAL 5%

Assuming the dividend declared is P 1,000,000 what will be the allocation of dividends if in case the preference share is CUMULATIVE and FULLY PARTICIPATING

Expert Solution

The payment entries can be understood to be paid on 5th January 2021 in each case.

ekkarill92 answered 1 year ago

It is preferable for shareholders to own preference shares instead of ordinary shares.

“It is preferable for shareholders to own preference shares instead of ordinary shares.” REQUIRED: Critically discuss,...

“It is preferable for shareholders to own preference shares instead of ordinary shares.” REQUIRED: Critically discuss, stating whether you agree or disagree with the above statement. Refer to relevant statutory law in your answer as appropriate.

Exercise 12.7 Cash dividends, stock dividends, and share splits L.O. 4 HiTech Manufacturing Company has 1,000,000...

Exercise 12.7 Cash dividends, stock dividends, and share splits L.O. 4 HiTech Manufacturing Company has 1,000,000 shares of $1 par value share capital outstanding on January 1. The following equity transactions occurred during the current year: Apr. 30 Distributed additional shares capital in a 2-for-1 share split. Market price of shares was $36 per share. June 1 Declared a cash dividend of $0.96 per share. July 1 Paid the $0.96 cash dividend to shareholders. Aug. 1 Declared a 5 percent...

Question 4: a) Explain the difference between preference shares and ordinary shares. (10 marks)

Question 4: a) Explain the difference between preference shares and ordinary shares.

PROBLEM 4 [Solving Ordinary Differential Equations]

PROBLEM 4 [Solving Ordinary Differential Equations] Solve the following ODE: $\frac{d y}{d x}=1+\frac{x}{y} \quad y(1)=1$a) Using Euler's method, for 1≤x≤4 and a step of 0.5 b) Using Euler's method, for 1≤x≤4 and a step of 0.25. c) Estimate your error in x-4 using the Richardson formula and provide an answer with the correct number of significant digits for y(4).

1. Shareholders invested £10,000 cash in the business in exchange for ordinary shares. 2. Purchased equipment...

1. Shareholders invested £10,000 cash in the business in exchange for ordinary shares. 2. Purchased equipment for £5,000 cash. 3. Paid £400 cash for May office rent. 4. Paid £700 cash for supplies. 5. Incurred £250 of advertising costs in the Beacon News on account. 6. Received £4,700 in cash from customers for repair service. 7. Declared and paid a £1,000 cash dividend. 8. Paid part-time employee salaries £1,000. 9. Paid utility bills £160. 10. Performed repair service worth £980...

The BOD of YOUR COMPANY is planning to declare dividends to its shareholders of record as...

The BOD of YOUR COMPANY is planning to declare dividends to its shareholders of record as of April 30, 2018. Based on the information gathered, YOUR COMPANY has investment opportunities of P8,000,000. However, the optimal capital structure is 20% debt and 80% equity. Retained Earnings as of December 31, 2017 is P10,000,000. YOUR COMPANY hired you as a consultant to determine what would be the optimal dividend payout.

Problem 11-49 Comparison of Allocation Methods (LO 11-2, 3, 4) BluStar Company has two service departments,...

Problem 11-49 Comparison of Allocation Methods (LO 11-2, 3, 4) BluStar Company has two service departments, Administration and Accounting, and two operating departments, Domestic and International. Administration costs are allocated on the basis of employees, and Accounting costs are allocated on the basis of number of transactions. A summary of BluStar operations follows: Administration Accounting Domestic International Employees – 29 48 23 Transactions 35,000 – 22,000 88,000 Department direct costs $ 353,000 $ 148,000 $ 945,000 $ 3,560,000 Required: a....

ABC company's ordinary shares are expected to pay $3 per share in dividends in 4 years...

ABC company's ordinary shares are expected to pay $3 per share in dividends in 4 years and after which the dividends are expected to grow at 2% annually forever. Company ABC's shares have a beta of 1.75. The long-term return of ASX200 is 9% and the return of T-bonds is 4% (a) What is the expected return of ABC's shares according to the CAPM? (b) What is the implied price per share? (c) If the shares are selling for $25/share,...

a) Companies have several means through which they distribute their dividends with shareholders. If the company...

a) Companies have several means through which they distribute their dividends with shareholders. If the company chooses to pay dividends in terms of stock repurchase, explain what is stock repurchase and its advantages. b) What are stock splits and what are the advantages of stock splits?

Question