The preference and ordinary shares outstanding of R. Dela Calzada, Inc. on Dec. 31, 2019 follows;8% Preference Shares, P10 par, cumulative, participating, 40,000 shares authorized, 10,000 shares issued and outstanding P100,000 Ordinary Shares, P2 par, 10,000 shares authorized, 250,000 shares issued and outstanding 500,000 Total Preference and Ordinary Shares 600,000 Required:Calculate the amount of dividends received by preference and ordinary shareholders, respectively, under each of the following assumptions: Preference dividends for 2018 are in arrears. On Dec. 31, 2019, R. Dela Calzada declared a total dividend of P56,000.No dividends are in arrears. On Dec. 31, 2019, R. Dela Calzada declared a total dividend of P66,000.Preference dividends for 2017 and 2018 are in arrears. On Dec. 31, 2019, R. Dela Calzada declared a total dividend of P88,000.EXPLAIN THE SOLUTIONS FOR ANSWER IN THE PICTURE Problem #21PreferenceOutstanding Share CapitalOrdinary500,000Total600,000100,000Preference Dividend in ArrearsP100,000 x 8% x 1 yr.Current Preference DividendP100,000 x 8%Current Ordinary Dividend at Preference RateP500,000 x 8%Total1.8,0008,0008,0008,00040,00040,00040,00056,00016,0008,00040,00018,000Current Preference DividendCurrent Ordinary Dividend at Preference RateRemainder for ParticipationPreference: 1/6 x P18,000Ordinary: 5/6 x P18,000Total2.8,00040,0003,00015,00055,00011,00066,000Preference Dividend in ArrearsP100,000 x 8% x 2 yrs.Current Preference DividendCurrent Ordinary Dividend at Preference RateRemainder for ParticipationPreference: 1/6 x P24,000Ordinary: 5/6 x P24,000Total3.16,0008,00040,00024,00016,0008,00040,0004,00020,00060,00028,00088,000cCount

Dividend is the disbursement of profit in consideration to the shares purchased by the shareholders.

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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The preference and ordinary shares outstanding of R. Dela Calzada, Inc. on Dec. 31, 2019 follows;

8% Preference Shares, P10 par, cumulative, participating, 40,000 shares authorized, 10,000 shares issued and outstanding P100,000

Ordinary Shares, P2 par, 10,000 shares authorized, 250,000 shares issued and outstanding 500,000

Total Preference and Ordinary Shares 600,000

Required:

Calculate the amount of dividends received by preference and ordinary shareholders, respectively, under each of the following assumptions:

Preference dividends for 2018 are in arrears. On Dec. 31, 2019, R. Dela Calzada declared a total dividend of P56,000.
No dividends are in arrears. On Dec. 31, 2019, R. Dela Calzada declared a total dividend of P66,000.
Preference dividends for 2017 and 2018 are in arrears. On Dec. 31, 2019, R. Dela Calzada declared a total dividend of P88,000.

EXPLAIN THE SOLUTIONS FOR ANSWER IN THE PICTURE

Problem #21
Preference
Outstanding Share Capital
Ordinary
500,000
Total
600,000
100,000
Preference Dividend in Arrears
P100,000 x 8% x 1 yr.
Current Preference Dividend
P100,000 x 8%
Current Ordinary Dividend at Preference Rate
P500,000 x 8%
Total
1.
8,000
8,000
8,000
8,000
40,000
40,000
40,000
56,000
16,000
8,000
40,000
18,000
Current Preference Dividend
Current Ordinary Dividend at Preference Rate
Remainder for Participation
Preference: 1/6 x P18,000
Ordinary: 5/6 x P18,000
Total
2.
8,000
40,000
3,000
15,000
55,000
11,000
66,000
Preference Dividend in Arrears
P100,000 x 8% x 2 yrs.
Current Preference Dividend
Current Ordinary Dividend at Preference Rate
Remainder for Participation
Preference: 1/6 x P24,000
Ordinary: 5/6 x P24,000
Total
3.
16,000
8,000
40,000
24,000
16,000
8,000
40,000
4,000
20,000
60,000
28,000
88,000
cCount

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