The Company has the same capital structure (except for retained earnings) for the past five year, see
Question:
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, P30par 6,000,000
Retained Earnings 5,000,000
No dividends were paid prior to 2020 for two years. On December10, 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 FULLYPARTICIPATING
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