Occidental Produce Company has 40 000 shares of ordinary shares outstanding and 2 000 shares of preference shares outstanding. The preference shares pay annual dividends of $4 each. On 15 October 2014, the company declares a total dividend payment of $40 000. How much dividend will be paid to the preference shareholders?
A)$2 000
B)$4 500
C)$8 000
D)$40 000

Question

Quizplus · Accepted Answer

Preference shareholders receive dividends before ordinary shareholders. With 2,000 preference shares and a $4 dividend per share, the total dividend for preference shareholders is 2,000 x $4 = $8,000.

Occidental Produce Company Has 40 000 Shares of Ordinary Shares