Question: Allocation of Dividends The shareholders equity in the statement of financial position on December 31, 2014 of Quijones Corporation showed the following: Preference share capital,

Allocation of Dividends

The shareholder’s equity in the statement of financial position on December 31, 2014 of Quijones Corporation showed the following:

Preference share capital, 10% P50 par, 40,000 shares P2,000,000

Ordinary shares capital, P100 par, 30,000 shares 3,000,000

Share premium 500,000

Retained earnings 2,500,000

Total shareholder’s equity P8,000,000

No dividends are in arrears up to December 31, 2012. The company declared a P1,000,000 dividend at the end of 2014 at the appropriate rate for preference shares and the remainder to ordinary.

REQUIRED:

Determine the allocation of the dividend to (1) preference and (2) ordinary, assuming the following cases:

a. Preference share is noncumulative and nonparticipating.

b. Preference share is cumulative and nonparticipating.

c. Preference share is cumulative and participating.

d. Preference share is cumulative and participating up to 12%.

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