The equity section of the Holden Ltd. balance sheet includes 75,000 shares of $0.40 cumulative preferred shares that had been issued for $375,000 and 200,000 common shares issued for a total of $720,000. Holden did not declare any dividends during the prior year and now declares and pays a $108,000 cash dividend.
a. Determine the amount distributed to each class of shareholders.
b. Repeat the calculations assuming the preferred shares were non-cumulative.