What is the amount to be paid to preference shareholders

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Reference no: EM132700129

The following are the shareholders' equity accounts of INDIA COMPANY at December 31, 2014.

Ordinary shares, P10 par; authorized 200, 000 shares;

Issued 90, 000 shares P900, 000

Preference shares, 12% P25 par; authorized

100, 000 shares; issued 15, 000 shares ; cumulative 375, 000

Share premium 2, 500, 000

Retained earnings 4, 750, 000

Treasury shares (7, 500 ordinary shares )

371, 250

The preference shares are participating in distribution in excess of a 15% dividend rate on the ordinary shares. No dividend have been paid in 2012 or 2013. On December 31, 2014, India wants to pay a cash dividend of P2 a share to ordinary shareholders.

Problem 1. What is the amount to be paid to preference shareholders ?

A. P153, 750 C. P108, 750

B. P90, 000 D. P135, 000

Problem 2. What is the amount to be paid to ordinary shareholders?

A. 105, 000 C. 99,000

B. 123,000 D. 165,000

Reference no: EM132700129

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