The annual dividend payable on the preferred shares is P3.50/year. Since 20,000 shares are outstanding it takes P70,000 to satisfy this requirement. On cumulative preferred shares any deficiency rolls over to the following years.

1. All P100,000 goes to the preferred shareholders to pay the current dividend and the delinquent P70,000 from last year and the missing P40,000 rolls over to next year. The ordinary shares get nothing.

2. same answer as above. There is no excess to participate in and the condition of that participation is not specified either.

I need help.

ABC corp. plans to declare and distribute a dividend in December 2012. There are 20,000 shares of 7% preference shares, par value P50 and 400,000 outstanding ordinary shares, P1 par value. No dividend was paid in the previous year

Required. Determine the amount of dividends that should be paid to preference and ordinary shareholders if the preference shares

1. Cumulative and non participating and the total amount that the board of directors has specified for dividends is 100,000

2. Cumulative and participating and the total amount that the board of directors has specified for dividends is 100,000