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Compute how much will the preferred shareholders receive

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In each of the following independent cases, it is assumed that the corporation has outstanding 20,000, $0.80, preferred shares, with a carrying value of $200,000, and 80,000 common shares, with a carrying value of $800,000. Although dividends have been paid regularly, no dividends were declared for past two years.

Question 1. At December 31, 2017, the board of directors wants to distribute $125,000 in dividends. How much will the preferred shareholders receive if their shares are cumulative and non-participating?

Question 2. At December 31, 2017, the board of directors wants to distribute $200,000 in dividends. How much will the preferred shareholders receive if their shares are cumulative and participating up to 15% in total?

Question 3. On December 31, 2017, the preferred shareholders received an $80,000 dividend on their shares, which are cumulative and fully participating. How much money was distributed in total for dividends?

Reference no: EM132492957

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