Windswept Power Corporation issued 150,000, $4.50 cumulative preferred shares to fund its first investment in wind generators.

Question:

Windswept Power issued 150,000, $4.50 cumulative preferred shares to fund its first investment in wind generators. In its first year of operations, it paid $450,000 of dividends to its preferred shareholders. In its second year, the company paid dividends of $900,000 to its preferred shareholders.
Instructions
(a) What is the total annual preferred supposed to be for the preferred shareholders?
(b) Calculate any dividends in arrears in years 1 and 2.
(c) Explain how dividends in arrears should be reported in the financial statements.
(d) If the preferred shares were noncumulative rather than cumulative, how much would the company likely have paid its preferred shareholders in year 2?
Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may... 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...