How cash dividends distributed between two types of shares

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Question - The shareholders' equity of Deer Ltd. at the end of 2020 and 2019 appeared as follows:

 

2020

2019

Share capital, preferred shares, $2 cumulative, 2,000,000 shares authorized, 26,000 shares issued

$182,000

$182,000

Share capital, 5,000,000 common shares authorized, 1,280,000 common shares issued (2019-1,090,000 shares)

5,310,000

4,360,000

Retained earnings

3,902,000

3,114,000

Total shareholders' equity

$9,394,000

$7,656,000

During 2020, Deer paid a total of $124,400 in cash dividends.

a. Assume the preferred shares were not in arrears at December 31, 2019. How was the $124,400 in cash dividends distributed between the two types of shares in 2020?

b. Assume the preferred share dividends were in arrears for one year; that is, the dividends were not paid in 2019. How was the $124,400 in cash dividends distributed between the two classes of shares?

Reference no: EM132178896

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