Question

Katie Corporation, based in Liverpool, has 20,000 preferred shares outstanding of no par value $2 dividend and 40,000 common shares outstanding of no par value.

In its first years of operation, the company paid the following dividends:
2010 .............$0
2011 .............$46,000
2012 ............. $78,000
2013 ............. $0
2014 ............. $82,000

Calculate the dividends paid to preferred and common shareholders in each of the five years under the following three independent situations:

a. Preferred shares are noncumulative and nonparticipating.

b. Preferred shares are cumulative and nonparticipating.

c. Preferred shares are cumulative and fully participating.

Answer 1

Year	2010($)	2011($)	2012($)	2013($)	2014($)
a. Dividend paid to non cumulative and non participating preferred shareholders	0	40000	40000	0	40000
Dividend paid to Common shareholders	0	6000	38000	0	42000
b. Dividend paid to cumulative and non participating preferred shareholders	0	46000	78000	0	82000
Dividend paid to Common shareholders	0	0	0	0	0
c. Dividend paid to cumulative and fully participating preferred shareholders	0	46000	78000	0	82000
Dividend paid to Common shareholders	0	0	0	0	0

Thankyou...