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The equity section of Lemay Corporation shows the following on December 31, 2011: Share...

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Question

Accounting

The equity section of Lemay Corporation shows the following on December 31, 2011:

Share capitalpreference5%, $100 par, 4,000 shares outstanding $ 400,000

Share capitalordinary$10 par, 60,000 shares outstanding 600,000

Retained earnings 114,000

Instructions

Assuming that all of the company's retained earnings are to be paid out in dividends on 12/31/11 and that preference dividends were last paid on 12/31/09 (one year in arrear), show how much the preference and ordinary shareholders should receive if the preference share is:

  1. Cumulative and non-participating
  2. noncumulative and fully participating.

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