A Company Has $100,000 of 10% Noncumulative, Nonparticipating, Preference Shares

Essay

A company has $100,000 of 10% noncumulative, nonparticipating, preference shares outstanding, and $150,000 of ordinary shares outstanding. In the company's first year of operation, no dividends were paid, but during the second year, it paid cash dividends of $25,000. Compute the dividends to be distributed to (1) preference shares and (2) ordinary shares.