Question

The following elements of shareholder’s equity are adapted from the balance sheet of Highest Manufacturing Ltd.:...

The following elements of shareholder’s equity are adapted from the balance sheet of Highest Manufacturing Ltd.:
Shareholder’s Equity
Preferred shares, $1.25 cumulative,
100,000 shares authorized, 18,000 shares issued and outstanding​​ $150,000
Common shares, 200,000 shares authorized, 60,000 shares issued
and outstanding​​​​​​​​​ 400,000
The company has paid all dividends through 2015
Required
Compute the dividends paid to preferred shareholders and to common shareholders for 2018 and 2019 if total dividends declared are $80,000 in 2018 and $30,000 in 2019. Round your answers to nearest dollar.
Business   Accounting   
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Answer #1
Amount $
Annual Preferred Dividend        22,500 (1.25 x 18,000 )
Preferred dividend in arrear        45,000 (2016 & 2017 )
(a) Total Dividend Declared in 2018 80,000
Allocated to
Peferred Shareholders        67,500 ( 45,000 + 22,500 )
Common Share holders        12,500 (80,000 - 67,500 )
Total Allocation $ 80,000
(b) Total Dividend Declared in 2019 30,000
Allocated to
Peferred Shareholders        22,500
Common Share holders          7,500 ( 30,000 - 57,500 )
Total Allocation $ 30,000
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