# Suivant SA’s ledger shows the following balances on December 31, 2019Share Capital, Preference, 5% \$10 par value, outstanding 20,000 shares \$200,000Share Capital Ordinary \$100 par value, outstanding 30,000 shares \$3,000,000 Retained earnings \$630,000InstructionsAssuming that the directors decide to declare total dividends in the amount of \$266,000, determine how much each class of shares should receive under each od this condition stated below. One year’s dividends are in arrears on the preference shares.The preference shares are cumulative and fully participating The preference shares are non-cumulative and non- participating.

Question
9 views

Suivant SA’s ledger shows the following balances on December 31, 2019
Share Capital, Preference, 5% \$10 par value, outstanding 20,000 shares \$200,000
Share Capital Ordinary \$100 par value, outstanding 30,000 shares \$3,000,000
Retained earnings \$630,000
Instructions
Assuming that the directors decide to declare total dividends in the amount of \$266,000, determine how much each class of shares should receive under each od this condition stated below. One year’s dividends are in arrears on the preference shares.
The preference shares are cumulative and fully participating
The preference shares are non-cumulative and non- participating.

check_circle

Step 1

Dividend of each class of shares:

Under Condition 1: One year’s dividends are in arrears on preference shares

The preference shares are cumulative and fully participating:

Computation of cumulative dividend:

Thus, the total cumulative dividend on preference stock is \$20,000.

Step 2

Thus, the total dividend to common stoc...

### Want to see the full answer?

See Solution

#### Want to see this answer and more?

Solutions are written by subject experts who are available 24/7. Questions are typically answered within 1 hour.*

See Solution
*Response times may vary by subject and question.
Tagged in