Dividends on Preferred Shares

Essay

Dividends on preferred shares
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 up to 2017, no dividends were declared in 2018 or 2019.
1. At December 31, 2020, 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?
2. At December 31, 2020, 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?
3. On December 31, 2020, 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?