BM1705

Accounting for Dividends (30 points: 6 items x 5 points)

Mac Corporation’s share capital accounts on December 31, 200C showed the following:

12% Preference Share Capital, par P100, authorized 10,000 shares, and issued 4,000 shares P 400,000
Ordinary Share Capital, par P30, authorized 100,000 shares, and issued 20,000 shares P 600,000

On this date, the Board of Directors declared cash dividends of P260,000. No dividends were declared since
200A.

Compute the dividends per share for each class of share capital assuming that the preference share is:
a. Non-cumulative and non-participating
Dividends Preferences Ordinary
Total dividends declared 260,000
Current preference dividends (12% x 400,000) (48,000) 48,000
Balance to ordinary shares 212,000
Ordinary dividends (212,000) 212,000
Distribution of dividends 0 48,000 212,000
Divide by outstanding shares 4,000 20,000
Dividends per share P 12.00 P 10.60

b. Non-cumulative and fully participating

Dividends Preferences Ordinary
Total dividends declared 260,000
Current preference dividends (12% x 400,000) (48,000) 48,000
Ordinary dividends (12% x 600,000) (72,000) 72,000
Balance: Pro rata 140,000
Preference (4/10 x 140,000) (56,000) 56,000
Ordinary (6/10 x 140,000) (84,000) 84,000
Distribution of dividends 0 104,000 156,000
Divide by outstanding shares 4,000 20,000
Dividends per share P 26.00 P 7.80

c. Cumulative and non-participating

Dividends Preferences Ordinary
Total dividends declared 260,000
Past preference dividends (12% x 400,000 x 2) (96,000) 96,000
Current preference dividends (48,000) 48,000
Balance to ordinary shares 116,000
Ordinary dividends (116,000) 116,000
Distribution of dividends 0 144,000 116,000
Divide by outstanding shares 4,000 20,000
Dividends per share P 36.00 P 5.80

d. Cumulative and fully participating

Dividends Preferences Ordinary
Total dividends declared 260,000
Past preference dividends (12% x 400,000 x 2) (96,000) 96,000
Current preference dividends (48,000) 48,000
Ordinary dividends (72,000) 72,000
Balance: Pro rata (44,000) 26,400
Distribution of dividends 0 144,000 98,400
Divide by outstanding shares 4,000 20,000
This study source wasDividends
downloaded byper share
100000839648416 from CourseHero.com on 01-13-2022 21:40:06 GMT -06:00 P 36.00 P 4.92

https://www.coursehero.com/file/96258508/07-Activity-3-BAdocx/
 e. Cumulative and participating only up to 15%
Dividends Preferences Ordinary
Total dividends declared 260,000
Past preference dividends (12% x 400,000 x 2) (96,000) 96,000
Current preference dividends (48,000) 48,000
Ordinary dividends (72,000) 72,000
Balance 44,000
Addt’l. 3% for preference shares (400,000 x 3%) (12,000) 12,000
Balance to ordinary shares 32,000
Ordinary dividends (32,000) 32,000
Distribution of dividends 0 156,000 104,000
Divide by outstanding shares 4,000 20,000
Dividends per share P 39.00 P 5.20

f. Cumulative and participating only after common gets 20%.

Dividends Preferences Ordinary
Total dividends declared 260,000
Past preference dividends (12% x 400,000 x 2) (96,000) 96,000
Current preference dividends (48,000) 48,000
Ordinary dividends (72,000) 72,000
Balance 44,000
Addt’l. 8% for ordinary shares (600,000 x 8%) 48,000 48,000
Balance to ordinary shares 92,000
Ordinary dividends (92,000) 92,000
Distribution of dividends 0 144,000 212,000
Divide by outstanding shares 4,000 20,000
Dividends per share P 36.00 P 10.60

This study source was downloaded by 100000839648416 from CourseHero.com on 01-13-2022 21:40:06 GMT -06:00

https://www.coursehero.com/file/96258508/07-Activity-3-BAdocx/
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