Exercise 15-6

Bridgeport Limited’s ledger shows the following balances onDecember 31, 2020:

Preferred shares outstanding: 31,000 shares		$	837,000
Common shares outstanding: 47,000 shares			3,478,000
Retained earnings			955,330

A.) Assuming that the directors decide to declare totaldividends in the amount of $477,665, determine how much each classof shares should receive if the preferred shares are cumulative andfully participating. Note that one year’s dividends are in arrearson the preferred shares, which pay a dividend of $1.35 pershare.

	Preferred	Common	Total
Dividend	$	$	$

B.) Assuming that the directors decide to declare totaldividends in the amount of $477,665, determine how much each classof shares should receive if the preferred shares are non–cumulativeand non–participating. Note that one year’s dividends are inarrears on the preferred shares, which pay a dividend of $1.35 pershare.

	Preferred	Common	Total
Dividend	$	$	$

C.) Assuming that the directors decide to declare totaldividends in the amount of $477,665, determine how much each classof shares should receive if the preferred shares are non–cumulativeand are participating in distributions in excess of a 9% dividendrate on the common shares. Note that one year’s dividends are inarrears on the preferred shares, which pay a dividend of $1.35 pershare.

	Preferred	Common	Total
Dividend	$	$	$