Question 6
If a company had 120,000, 4% preference shares of ＄1 each and 250,000 ordinary shares of ＄ 1 each, then the dividends would be payable as follows:
Year 1 Year 2 Year 3 Year 4 Year 5
＄ ＄ ＄ ＄ ＄
Total Profits appropriated for dividends 7,000 3,000 20,000 4,000 5,000
Required:
(a)If the preference shares are cumulative, non-participating, calculate the preference dividends and ordinary dividends in each year.
(b)If the preference shares are cumulative, participating, calculate the preference dividends and ordinary dividends in each year.