Andam Corporation has outstanding 60,000 shares of 5% preference shares with a P50 par value and 300,000 shares of P30 par ordinary shares. During the current year, the corporation declared and paid a total cash dividend of P900,000. Required: For each of the following independent cases below, compute the total dividends to be received by each class of stock. 1. The preference share is non-cumulative and non-participating 2. The preference share is cumulative and non-participating with one-year dividends in arrears 3. The preference share is non-cumulative and participating 4. The preference share is cumulative and participating with no dividends in arrears 5. The preference share is cumulative and participating with three years dividends in arrears
Dividend Policy
A dividend is a part of the profit paid to the shareholder in an organization. The management of the organization has the right to decide the policy for giving a dividend from the earnings to the shareholder. However, an organization is not in the obligation to declare a dividend for the investor. Dividend policy differs from organization to organization. As the management has the only authority to decide dividend rate, dividend amount, and time of dividend payout by considering all other elements that create an impact on the payment of a dividend.
Stocks And Dividends
Stock or equities are generally sold and bought in the Stock Exchange or which is popularly known as the stock market. Stocks are issued in the Stock Exchange for the sole purpose of raising funds for the Corporation or the company itself. Now since an individual has purchased a portion of the Corporation or company, he or she may claim to be a part of the earnings or profit of the company.
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