Dallas Sports Ltd has 100 shares of $15, noncumulative, preferred shares outstanding, and $160,000 of common shares outstanding. In the company's first year of operation, no dividends were paid, but during the second year Dallas Sports paid dividends of$24,000. The dividend should be distributed as follows:

Question

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The preferred shares have a dividend of $15 per share, totaling $1,500 for 100 shares. Since they are noncumulative, they do not receive dividends for the first year. Therefore, in the second year, $1,500 goes to preferred shares and the remaining $22,500 goes to common shares.

Dallas Sports Ltd Has 100 Shares of $15, Noncumulative, Preferred