Question

The outstanding share capital of Meadowcrest Corporation consists of 3,000 shares of preferred and 7,000 common shares for which $280,000 was received. The preferred shares carry a dividend of $7 per share and have a $100 stated value.
Instructions
Assuming that the company has retained earnings of $95,000 that is to be entirely paid out in dividends and that preferred dividends were not paid during the two years preceding the current year, state how much each class of shares should receive under each of the following conditions.
(a). The preferred shares are non-cumulative and non-participating.
(b). The preferred shares are cumulative and non-participating.
(c). The preferred shares are cumulative and participating.


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  • CreatedAugust 23, 2015
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