Preference over dividends4. Rainbow Co. has 100,000 (P50 par) 6% preference shares and250.000 (P40 par) ordinary shares outstanding since it startedoperations three years ago. Rainbow Co. has never declareddividends. In Year 3, Rainbow Co. plans to declare P2,000,000dividends. What amounts of dividends would the preferenceand ordinary shareholders receive, respectively, if thepreference shares are:sevelative and ned) Cumulative and participating?e) Cumulative and participating up to 16%?f) Cumulative and non-participating and Rainbow Co. declaredtotal cash dividends of P100,000 in Year 1 and P80,000 in Year 2?

Answered: Image /qna-images/answer/32df4ac3-4263-4a17-a140-0865e812fada.jpg

d) Cumulative and participating? e) Cumulative and participating up to 16%? f) Cumulative and non-participating and Rainbow Co. declared total cash dividends of P100,000 in Year 1 and P80,000 in Year 2?

d) Cumulative and participating? e) Cumulative and participating up to 16%? f) Cumulative and non-participating and Rainbow Co. declared total cash dividends of P100,000 in Year 1 and P80,000 in Year 2?

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter15: Contributed Capital

Section: Chapter Questions

Problem 12RE: Assume that Lily Corporation has outstanding 1,500 shares of 150 par callable preferred stock that...

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Preference over dividends 4. Rainbow Co. has 100,000 (P50 par) 6% preference shares and 250.000 (P40 par) ordinary shares outstanding since it started operations three years ago. Rainbow Co. has never declared dividends. In Year 3, Rainbow Co. plans to declare P2,000,000 dividends. What amounts of dividends would the preference and ordinary shareholders receive, respectively, if the preference shares are: al Noncumulative and non-participating? b) Cumulative and non-participating? Noncumulative and participating? d) Cumulative and participating? e) Cumulative and participating up to 16%? Cumulative and non-participating and Rainbow Co. declared total cash dividends of P100,000 in Year 1 and P80,000 in Year 2?
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