What will be the deficiency or surplus apportioned to preference shareholders?

Question

Quizplus · Accepted Answer

The question does not provide enough information to determine whether there is a deficiency or a surplus. Therefore, we cannot choose options A or C. Option D suggests a deficiency of $18,000, which is twice the amount of the preference dividend of $9,000. This is unlikely as a company is unlikely to issue more preference shares than it can afford to pay dividends on. Option B suggests a deficiency of $11,250, which is equal to the preference dividend of $9,000 plus the arrears of $2,250. This is a more plausible scenario if the company has fallen behind on paying dividends to preference shareholders. Therefore, the best choice is B.

What Will Be the Deficiency or Surplus Apportioned to Preference