Allstate, Inc., has 10,000 shares of 6%, $100 par value, noncumulative preference shares and 100,000 ordinary shares with a $1 par value outstanding at December 31, 2014. If the board of directors declares a $150,000 dividend, the

Question

Quizplus · Accepted Answer

The preference shares are noncumulative, meaning they do not accumulate any unpaid dividends. Therefore, the preference shareholders will receive their full dividend of $60,000 (10,000 shares x $100 par value x 6% dividend rate) and the remaining $90,000 will be paid to the ordinary shareholders.