Wheaton Tire Inc., [WTI] reported the following excerpts from shareholders’ equity on January 1, 2021: Preferred shares, 0.90, 300,000 issued and outstanding $6,000,000 Common shares, 400,000 issued and outstanding $4,400,000 The company declared and paid a cash dividend on February 1, 2021 of $1,400,000. Dividends had not been declared for the past two years, 2019 and 2020. now assume that for this question only that the preferred shares were non cumulative and fully participating. How much will each shareholder group receive? Select one: a. All $1,400,000 to Common since the Preferred are non-participating. b. Each group receives an equal amount of $700,000 per group. c. $270,000 to Preferred and $1,130,000 to Common. d. $807,692 to Preferred and $592,308 to Common. e. None of the above.
Wheaton Tire Inc., [WTI] reported the following excerpts from shareholders’ equity on January 1, 2021: Preferred shares, 0.90, 300,000 issued and outstanding $6,000,000 Common shares, 400,000 issued and outstanding $4,400,000 The company declared and paid a cash dividend on February 1, 2021 of $1,400,000. Dividends had not been declared for the past two years, 2019 and 2020. now assume that for this question only that the preferred shares were non cumulative and fully participating. How much will each shareholder group receive? Select one: a. All $1,400,000 to Common since the Preferred are non-participating. b. Each group receives an equal amount of $700,000 per group. c. $270,000 to Preferred and $1,130,000 to Common. d. $807,692 to Preferred and $592,308 to Common. e. None of the above.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Wheaton Tire Inc., [WTI] reported the following excerpts from shareholders’ equity on January 1, 2021:
Common shares, 400,000 issued and outstanding $4,400,000
The company declared and paid a cash dividend on February 1, 2021 of $1,400,000. Dividends had not been declared for the past two years, 2019 and 2020.
now assume that for this question only that the preferred shares were non cumulative and fully participating. How much will each shareholder group receive?
Select one:
a.
All $1,400,000 to Common since the Preferred are non-participating.
b.
Each group receives an equal amount of $700,000 per group.
c.
$270,000 to Preferred and $1,130,000 to Common.
d.
$807,692 to Preferred and $592,308 to Common.
e.
None of the above.
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