Regan, Inc No Dividends Were Declared or Paid During the Prior Year

Essay

Regan, Inc., declared a cash dividend of $40,000 in 20X2 when the following shares were outstanding: $$\begin{array} { | l | r | } \hline \text { Common shares, } 20,000 \text { shares } & \$ 400,000 \\\hline \text { Preferred shares, } 40.60,2,500 \text { shares } & 25,000 \\\hline\end{array}$$ No dividends were declared or paid during the prior year. Compute the amount of cash that would be paid to each shareholder group under each of the following separate cases: $$\begin{array} { | l | l | } \hline \text { Case A - } & \begin{array} { l } \text { The preferred shares are non-cumulative } \\\text { Preferred } \$\underline{\quad\quad} \quad \text { Common } \$\underline{\quad\quad}\end{array} \\ \hline \text { Case B - } & \begin{array} { l } \text { The preferred shares are cumulative } \\\text { Preferred } \$ \underline{\quad\quad}\quad \text { Common } \$\underline{\quad\quad}\end{array} \\\hline\end{array}$$