Looper, Inc. has 30,000 shares of 6%, ₤100 par value, noncumulative preference shares and 50,000 ordinary shares with a ₤1 par value outstanding at December 31, 2017. There were no dividends declared in 2016. The board of directors declares and pays a ₤250,000 dividend in 2017. What is the amount of dividends received by the common shareholders in 2017?
A)₤0
B)₤180,000
C)₤250,000
D)₤70,000

Question

Quizplus · Accepted Answer

The preference shareholders receive their dividend first. With a 6% dividend on ₤100 par value, they receive ₤6 per share. For 30,000 shares, this totals ₤180,000. The remaining ₤70,000 of the ₤250,000 total dividend goes to the ordinary shareholders.