Tunn Company revealed the following shareholders’ equity on December 31, 2019: 12% nonparticipating, noncumulative preference share capital, par value of P100, 10,000 shares 1,000,000 10% fully participating, cumulative preference share capital, par value of P100, 25,000 shares 2,500,000
Problem 18-28
Tunn Company revealed the following shareholders’ equity on December 31, 2019:
| 12% nonparticipating, noncumulative |
1,000,000 |
| 10% fully participating, cumulative preference share capital, par value of P100, 25,000 shares | 2,500,000 |
| Ordinary share capital, par value of P100, 75,000 shares | 7,500,000 |
The entity has not paid a cash or stock dividend before. There was no change in the
capital balance since the entity started operations five years ago.
The entity reported net loss for 2015, 2016 and 2017 at P1,500,000, P1,000,000 and
P500,000, respectively, and net income for 2018 and 2019 at P1,750,000 and
P6,250,000, respectively.
The maximum amount available for dividend on December 31, 2019 is declared and
paid.
What amount of dividend should be distributed to
1. Ordinary shareholders?
a. 3,750,000
b. 2,910,000
c. 500,000
d. 750,000
2. 12% preference shareholders?
a. 120,000
b. 600,000
c. 300,000
d. 0
3. 10% preference shareholders?
a. 1,250,000
b. 1,970,000
c. 720,000
d. 250,000
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