A Company Has 15 000 Cumulative Preference Shares Outstanding and 25

question 103

Multiple Choice

A company has 15 000 cumulative preference shares outstanding and 25 000 shares of ordinary shares outstanding. The preference shares pay an annual dividend of $5 each. Dividends of $37 500 are in arrears. At the end of the current year, the company declares a dividend of $120 000. What is the dividend per share for preference shares and for ordinary shares?

• A)The dividend per share is $8.00 to preference shares and $0 to ordinary shares.
• B)The dividend per share is $7.50 to preference shares and $.30 to ordinary shares.
• C)The dividend per share is $.50 to preference shares and $4.60 to ordinary shares.
• D)None of the above are correct.

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