Lea Corp Declared $ 35,000 in Dividends in 2021

question 160

Essay

Lea Corp. declared $ 35,000 in dividends in 2021. Share capital consists of 1,100 common shares and 3,700, $ 2 preferred shares. Dividends have not been paid on the preferred shares since 2018.
Instructions
Determine the dividends to be paid on preferred shares assuming:
a) the preferred shares are cumulative.
b) the preferred shares are noncumulative.

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Definitions:

Interest Rate

The percentage of a sum of money charged for its use, which can vary depending on the type of loan, the duration, and the risk involved.

Credit Availability

Credit availability denotes the ease with which individuals or businesses can obtain loans or credit from financial institutions.

FDIC

Federal Deposit Insurance Corporation, a U.S. government agency that insures deposits at commercial banks and savings institutions, providing depositor protection against bank failures.

Too-Big-To-Fail

A concept suggesting that certain corporations or institutions are so large and interconnected that their failure would be disastrous to the broader economy, often leading to government intervention.