PARTICIPATING

1. Tomlin co. has outstanding 300000 shares of P2 par ordinary shares

and 60000 shares of no par 8% preferred shares with a stated value
of P 5 the preferred share is cumulative and participating. Dividends
have been paid in every year except the past two years and the
current year. Assuming that 183, 000 will be distributed and the
preferred stock is also participating how much will the common
stockholders receive?

300,000 600,000 900,000

60,000*5 300,000*2 Total
Preferred Ordinary 183,000

60,000*5*.08*3 years 72,000

300,000*2*.08 48,000 120,000

21,000 21,000 42,000 63,000

( 63k*300k*/900k)
42,000

( 63k*600k/900k)
63,000

93,000 90,000
 Non participating
2. Tomlin co. has outstanding 300000 shares of P2 par ordinary shares
and 60000 shares of no par 8% preferred shares with a stated value
of P 5 the preferred share is cumulative and participating. Dividends
have been paid in every year except the past two years and the
current year. Assuming that 150, 000 will be distributed and the
preferred stock is also participating how much will the common
stockholders receive?

Preferred Ordinary Total

60k*5*.08*3years 150,000
72,000

300k*2*.08
48,000

72,000-150,000 Answer: 78,000