Question

Winter Company paid dividends of P250,000 and P350,000 at the end of 2014 and 2015 , respectively. the corporation has not paid any other dividends since its organization on January 2, 2013. The outstanding shares are 20,00012% preferred shares, P100 par and 30,000 ordinary shares P10 par. If the preferred share is non-cumulative, how much cash dividends would ordinary shares receive in 2014?

Answer 1

The cash dividends received by ordinary shares in 2014 would be P8.33 per share.

Step-by-step explanation:

To determine the cash dividends that ordinary shares would receive in 2014, we need to consider the dividends paid to preferred shares first. It is stated that the preferred shares are non-cumulative, which means that if the company skips paying dividends to preferred shareholders in a particular year, they do not accumulate and cannot be paid in a later year. Therefore, the preferred shares would not receive any dividends in 2014 as the company did not pay any dividends to them.

After ensuring that the preferred shares do not receive any dividends, we can calculate the cash dividends for ordinary shares. The total amount of dividends paid in 2014 is given as P250,000. This amount will be allocated to the ordinary shares. To determine the amount for each ordinary share, we need to divide P250,000 by the number of ordinary shares, which is 30,000. The cash dividends per ordinary share in 2014 would be P8.33.