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Question

1. Tijiu Broadcasting Inc. has 15,000 $2.50 preferred shares and 75,000 common shares outstanding. Tijiu

Broadcasting Inc. declared and paid the following dividends during a three-year period: 2018, $45,000; 2019, $0; and 2020, $120,000.

Required

1. Compute the total dividends on preferred shares and common shares for each of the three years if

a. Preferred shares are noncumulative

b. Preferred shares are cumulative

2. For Requirement 1(b), record the declaration of the 2020 dividends on December 28, 2020, and the payment of the dividends on January 17, 2021. Use separate Dividends Payable accounts for preferred shares and common shares.

 

2. The balance sheet of OWL Corp. reported the following:

Shareholders' Equity

Preferred shares, redeemable, nonvoting, cumulative, authorized 16,000 shares, liquidation value $350,000                                                                                                                                                        $350,000

Common shares, authorized 200,000 shares, issued 90,000 shares                                                                                                                                                          340,000

Retained earnings                                                                                                                                                          120,000

Total shareholders' equity                                                                                                                                                        $810,000

 

Notes to the financial statements indicate that 16,000 of the cumulative preferred shares were issued and outstanding. The shares paid a dividend of $1.40. Preferred dividends have not been paid for three years, including the current year. On the balance sheet date, the market value of OWL Corporation's common shares was $3.00 per share.

Required

1. Are the preferred shares cumulative or noncumulative? How can you tell?

2. Which class of shareholders controls the company? Give your reason.

3. What is the total contributed capital of the company?

4. What was the total market value of the common shares?

5. Compute the book value per share of the preferred shares and the common shares.

Top Answer

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B7
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1
A
B
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G
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1
1a
If Preferred shares are noncumulative
total dividends
total dividends
year
on preferred
on common
total
W
shares
shares
2018
$37,500
$7,500
$45,000
2019
SO
SO
2020...

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