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

Question:

Golda 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 Golda's dividends:
1. Are Golda Inc.'s preferred shares cumulative or noncumulative? How can you tell?
2. Suppose Golda Inc. declares cash dividends of $15,000 for 2014. How much of the dividends goes to preferred shares? How much goes to common shares?
3. Suppose Golda Inc. did not pay the preferred in 2012 and 2013. In 2014, the company declares cash dividends of $15,000. How much of the dividends goes to preferred shares? How much goes to common shares?
Dividend
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