Discuss non-cumulative and participating in distributions

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Reference no: EM131764732

I'm trying to figure out how to calculate dividends declared that are cumulative and participating and non cululative and participating. I am able to determine what the allocated amount for P/S and C/S are for non cumulative and non participating. 

The question is as follows: Cumulative and fully participating

Assuming that the directors decide to declare total dividends in the amount of $509,800, determine how much each class of shares should receive if the preferred shares are cumulative and fully participating. Note that one year's dividends are in arrears on the preferred shares, which pay a dividend of $1.00 per share.

Non cumulative and non participating

Assuming that the directors decide to declare total dividends in the amount of $509,800, determine how much each class of shares should receive if the preferred shares are non-cumulative and are participating in distributions in excess of a 7.00% dividend rate on the common shares. Note that one year's dividends are in arrears on the preferred shares, which pay a dividend of $1.00 per share. 

Relevant Information:

Preferred shares outstanding: 19,000 shares   $ 380,000
Common shares outstanding: 38,000 shares     2,736,000
Retained earnings    

1,019,600

Reference no: EM131764732

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