Problem
At the beginning of its first year, Blue Resorts Corp. had the following capital structure:
Preferred shares- 5,000 issued, 5% dividend of $200,000
Common shares- 12,000 issued $400,000
$600,000
Dividends declared and paid were as follows in its first two years: Yr. 1- $9,000; Yr. 2- $43,000
Prepare a table showing the number of dividends paid in Yr. 1 and Yr. 2 to each class of shareholder under the following assumptions:
i. The preferred stock is noncumulative and non participating
ii. The preferred stock is cumulative and fully participating
iii. The preferred stock is cumulative and participating after the common shares receive 7.5% of their invested capital.