The shareholder's equity of Loveless Corporation on December 31, 2022 shows the following balances:

Preference shares, 12% P100 par                                                                      P 1,000,000

Ordinary share, P100                                                                                                 4,100,000

Subscribed Preference share                                                                                    200,000

Subscription receivable-Preference                                                                        50,000

Share Premium-Ordinary                                                                                        2,000,000

Retained Earnings                                                                                                        3,000,000

Preference share treasury shares (2,000 shares)                                                 250,000

Ordinary share treasury shares (1,000 shares)                                                       125,000

Dividends have not been paid for 2 years (including the current year)

 

Required: Assume that 80% of the retained earnings are available for distribution as cash dividend. Compute for the dividends per share under each of the conditions with respect to preference share: (Show solutions)

1. Noncumulative and nonparticipating
2. Cumulative and nonparticipating
3. Noncumulative and participating
4. Cumulative and participating
5. Cumulative and participating up to 16%

Answer rating: 100% (QA)

To compute for the dividends per share under each of the given conditions we need to determine the total amount available for distribution as cash dividends and the number of outstanding shares for ea... View the full answer