A Company Has 10 000 Non- Cumulative Preference Shares Outstanding

question 10

Multiple Choice

A company has 10 000 non- cumulative preference shares outstanding and 20 000 ordinary shares outstanding. The preference shares pay an annual dividend of $5 per share. At the end of the current year, the company declares a dividend of $120 000. How is the dividend allocated between preference and ordinary shareholders?

• A)The dividend is allocated $12 000 to preference shareholders and $108 000 to ordinary shareholders.
• B)The dividend is allocated $60 000 to preference shareholders and $60 000 to ordinary shareholders.
• C)The dividend is allocated $50 000 to preference shareholders and $70 000 to ordinary shareholders.
• D)The dividend is allocated $5 000 to preference shareholders and $115 000 to ordinary shareholders.

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Definitions:

Lost Wax

A sculpting technique where a model is made in wax, covered with clay, melted out, and replaced with molten metal to form the sculpture.

Prestige Object

An object considered highly valuable or esteemed, often because of its rarity, craftsmanship, or association with power or wealth.

Elephant Tusk

The elongated incisor, usually very large, of an elephant, valued for its ivory.

Produced Figure

Artwork or sculpture of a figure that has been created or manufactured, often implying a sense of craft or artistic production.