The shareholders\' equity of Deer Ltd. at the end of 2016 and 2015 appeared as f

Question

The shareholders' equity of Deer Ltd. at the end of 2016 and 2015 appeared as follows: Share capital, preferred shares, $2 cumulative, 2,000,000 shares $217,00$217,600 4,960,000 3,960,000 4,066,000 3,254,000 59,243,600 $7,431,600 authorized, 27,200 shares issued Share capital, 5,000,000 common shares authorized, 1,190,000 common shares issued (2015-990,000 shares) Retained earnings Total shareholders' equity During 2016, Deer paid a total of $115,700 in cash dividends Assume the preferred shares were not in arrears at December 31, 2015. How was the $115,700 in cash dividends distributed between the two types of shares in 2016? 2016 Assume the preferred share dividends were in arrears for one year: that is, the dividends were not paid in 2015. How was the $115,700 in cash dividends distributed between the two classes of shares? 2015 arrears 2016

Explanation / Answer

Preferred shares not in arrears: 2016 Dividend 115700 Less:Paid to preferred (27200*2) 54400 Balance to common 61300 Preferred shares in arrears: Dividend 115700 Less:Paid to preferred Arrear-2015 (27200*2) 54400 Current year (27200*2) 54400 Balance to common 6900

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