Question

Assume the following information for Jewong Co. at December 31, 2020. 12% Cumulative and Non-participating Preference...

Assume the following information for Jewong Co. at December 31, 2020.

12% Cumulative and Non-participating Preference Share, P10 par, 15,000 shares issued and outstanding Ordinary Share, P5 par, 60,000 shares issued and outstanding.

The company declared and paid cash dividends amounting to P30,000 for the year. At the beginning of the year, undeclared dividends amounted to P13,500.

What is the amount of dividends paid to the company’s ordinary shareholders?

Please answer immediately.

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Homework Answers

Answer #1
Preference Shares 15000
Par Value 10
% of Dividend 12%
Dividend per share 1.2
Total Dividend for Preference Shares =15000*1.2
18000
Add: Undeclared Dividends 13500
Total Dividends due to preference share holders 31500
Less: Dividend declared and paid during the current year 30000
Balance Dividend payable to prefernce share holders carried forward 1500

Ordinary shareholders are paid dividends only after paying the dividends for preference shareholders. As per  the above calculations there is no excess amount available for paying ordinary shareholders. To conclude, No dividends were paid to oridinary shareholders for the year.

Hope this helps! In case of any clarifications, kindly use the comment box below

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