Allocation of Cash Dividends to Preference and Ordinary Shareholders)
Problem 4 (Allocation of Cash Dividends to Preference and Ordinary Shareholders)
The Company has the same capital structure (except for
6%
Ordinary Share Capital, 200,000 shares issued and outstanding, P 30 par 6,000,000
Retained Earnings 5,000,000
No dividends were paid prior to 2020 for two years. On December 10, 2020, the Company declared P 1,500,000 as cash dividends to shareholders of record of December 21, 2020, payable on January 5, 2021.
Requirements:
Prepare all the necessary
- Allocate the dividends between ordinary shareholders and preference shareholders if:
Case A. Preference share capital is NON-CUMULATIVE and NON-PARTICIPATING
Case B. Preference share capital is CUMULATIVE and NON-PARTICIPATING
Case C. Preference share capital is NON-CUMULATIVE and FULLY PARTICIPATING
Case D. Preference share capital is NON-CUMULATIVE and PARTICIPATING UP TO ADDITIONAL 5%
IMPORTANT: CASE D
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