At December 31,2018 and 2019, ABC Company had outstanding 4,000 shares of P 100 par value, 12% cumulative, fully participating preference shares and 20,000, P 10 par value ordinary shares. At December 31,2018, dividends in arrears on the preference shares were P 24,000. Cash dividends declared in 2019 totaled P 108,000. What is the total amount of dividends payable to preference shareholders? A.24,000 B.72,000 C. 56,000 D.80,000

At December 31,2018 and 2019, ABC Company had outstanding 4,000 shares of P 100 par value, 12% cumulative, fully participating preference shares and 20,000, P 10 par value ordinary shares. At December 31,2018, dividends in arrears on the preference shares were P 24,000. Cash dividends declared in 2019 totaled P 108,000. What is the total amount of dividends payable to preference shareholders? A.24,000 B.72,000 C. 56,000 D.80,000

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

At December 31,2018 and 2019, ABC Company had outstanding 4,000 shares of P 100 par value, 12% cumulative, fully participating preference shares and 20,000, P 10 par value ordinary shares. At December 31,2018, dividends in arrears on the preference shares were P 24,000. Cash dividends declared in 2019 totaled P 108,000.

What is the total amount of dividends payable to preference shareholders?

A.24,000

B.72,000

C. 56,000

D.80,000

Definition Definition Type of stock which is granted priority over dividend distributions as compared to common stockholders. Preferred stocks also do not carry any voting rights. Notably, in a case where a company is going to be liquidated, preferred stockholders have a priority claim on the value of assets of the company as quoted in the balance sheet, as compared to the common stockholders.

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