Xiong Inc. has the following shareholders' equity: Preferred shares, $0.025, cumulative, liquidation value $0.50, 50,000 shares authorized,

Question:

Xiong Inc. has the following shareholders' equity:
Preferred shares, $0.025, cumulative, value $0.50,
50,000 shares authorized, 45,000 shares issued and outstanding ............ $ 20,000
Common shares, 1,000,000 shares authorized
and issued and outstanding ....................................................... 200,000
Retained earnings ................................................................... 130,000
Total shareholders' equity ........................................................... $350,000
Answer these questions about Xiong's dividends:
1. Are Xiong Inc.'s preferred shares cumulative or noncumulative? How can you tell?
2. Suppose Xiong Inc. declares cash dividends of $17,000 for 2017. How much of the dividends goes to preferred shares? How much goes to common shares?
3. Suppose Xiong Inc. did not pay the preferred in 2015 and 2016. In 2017, the company declares cash dividends of $17,000. How much of the dividends goes to preferred shares? How much goes to common shares?
Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their... Liquidation
Liquidation in finance and economics is the process of bringing a business to an end and distributing its assets to claimants. It is an event that usually occurs when a company is insolvent, meaning it cannot pay its obligations when they are due....