Question

Garda World Security Corporation has the following shares, taken from the equity section of its balance sheet dated December 31, 2017.

Preferred shares, $4.43 non-cumulative,
40,000 shares authorized and issued*	2,560,000
Common shares,
75,000 shares authorized and issued*	1,200,000

*All shares were issued during 2015.

During its first three years of operations, Garda World Security Corporation declared and paid total dividends as shown in the last column of the following schedule.


Required:
Part A
1. Calculate the total dividends paid in each year to the preferred and to the common shareholders.

	Year Preferred Dividend Common Dividend Total Dividend 2015 $155,000 2016 395,000 2017 555,000 Total for three years $1,105,000

2. Calculate the dividends paid per share to both the preferred and the common shares in 2017. (Round the final answers to 2 decimal places.)

	Dividends Paid per Share Preferred shares Common shares

Part B
1. Calculate the total dividends paid in each year to the preferred shares and to the common shareholders assuming preferred shares are cumulative.

	Year Preferred Dividend Common Dividend Total Dividend 2015 $155,000 2016 395,000 2017 555,000 Total for three years $1,105,000

2. Calculate the dividends paid per share to both the preferred and the common shares in 2017 assuming preferred shares are cumulative. (Round the final answers to 2 decimal places.)

	Dividends Paid per Share Preferred shares Common shares

Answer 1

Non-cumulative preference share does not carry forward any unpaid dividend to next year. if any amount is not paid in current year then it will be lapse

Cumulative = dividend does not lapse if npaid. transfer to next period.