{"id":196864,"date":"2025-03-06T08:05:28","date_gmt":"2025-03-06T08:05:28","guid":{"rendered":"https:\/\/learnexams.com\/blog\/?p=196864"},"modified":"2025-03-06T08:05:30","modified_gmt":"2025-03-06T08:05:30","slug":"the-outstanding-share-capital-of-flint-corporation-consists-of-3190-preferred-shares-and-8700-common-shares-for-which-261000-was-received","status":"publish","type":"post","link":"https:\/\/www.learnexams.com\/blog\/2025\/03\/06\/the-outstanding-share-capital-of-flint-corporation-consists-of-3190-preferred-shares-and-8700-common-shares-for-which-261000-was-received\/","title":{"rendered":"The outstanding share capital of Flint Corporation consists of 3,190 preferred shares and 8,700 common shares for which $261,000 was received"},"content":{"rendered":"\n<p>The outstanding share capital of Flint Corporation consists of 3,190 preferred shares and 8,700 common shares for which $261,000 was received. The preferred shares carry a dividend of $7 per share and have a $100 stated value.<\/p>\n\n\n\n<p>(a) Assuming that the company has retained earnings of $101,600 that is to be entirely paid out in dividends and that preferred dividends were not paid during the 2 years preceding the current year, state how much each class of shares should receive if the preferred shares are non-cumulative and non-participating.<\/p>\n\n\n\n<p><mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-ast-global-color-6-color\"><strong>The correct answer and explanation is :<\/strong><\/mark><\/p>\n\n\n\n<figure class=\"wp-block-image size-full\"><img decoding=\"async\" src=\"https:\/\/learnexams.com\/blog\/wp-content\/uploads\/2025\/03\/image-314.png\" alt=\"\" class=\"wp-image-196865\"\/><\/figure>\n\n\n\n<p>To determine the dividend distribution between preferred and common shareholders of Flint Corporation, we need to consider the characteristics of the preferred shares and the total dividends to be distributed.<\/p>\n\n\n\n<p><strong>Preferred Shares:<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Quantity:<\/strong> 3,190 shares<\/li>\n\n\n\n<li><strong>Dividend per Share:<\/strong> $7<\/li>\n\n\n\n<li><strong>Stated Value:<\/strong> $100<\/li>\n\n\n\n<li><strong>Type:<\/strong> Non-cumulative and non-participating<\/li>\n<\/ul>\n\n\n\n<p><strong>Common Shares:<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Quantity:<\/strong> 8,700 shares<\/li>\n<\/ul>\n\n\n\n<p><strong>Total Dividends Available:<\/strong><\/p>\n\n\n\n<p>The company has retained earnings of $101,600, which are to be entirely paid out as dividends.<\/p>\n\n\n\n<p><strong>Dividend Distribution:<\/strong><\/p>\n\n\n\n<ol class=\"wp-block-list\">\n<li><strong>Preferred Dividends:<\/strong> Since the preferred shares are non-cumulative, they are entitled only to the current year&#8217;s dividend and do not accumulate dividends from previous years. Therefore, any unpaid dividends from the past two years are forfeited. <\/li>\n<\/ol>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Total Preferred Dividend:<\/strong> 3,190 shares \u00d7 $7\/share = $22,330<\/li>\n<\/ul>\n\n\n\n<ol class=\"wp-block-list\">\n<li><strong>Common Dividends:<\/strong> After distributing dividends to preferred shareholders, the remaining amount is allocated to common shareholders.<\/li>\n<\/ol>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Remaining Amount for Common Dividends:<\/strong> $101,600 (total dividends) &#8211; $22,330 (preferred dividends) = $79,270<\/li>\n\n\n\n<li><strong>Dividend per Common Share:<\/strong> $79,270 \u00f7 8,700 shares \u2248 $9.11 per share<\/li>\n<\/ul>\n\n\n\n<p><strong>Summary:<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Preferred Shareholders:<\/strong> Each receives $7, totaling $22,330.<\/li>\n\n\n\n<li><strong>Common Shareholders:<\/strong> Each receives approximately $9.11, totaling $79,270.<\/li>\n<\/ul>\n\n\n\n<p><strong>Explanation:<\/strong><\/p>\n\n\n\n<p>In dividend distribution, preferred shareholders typically have priority over common shareholders. However, the specific terms of the preferred shares significantly influence this distribution.\ue206<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Non-Cumulative Preferred Shares:<\/strong> These shares do not accumulate unpaid dividends from previous years. If a dividend is not declared in a given year, shareholders of non-cumulative preferred shares are not entitled to claim those missed dividends in the future. <\/li>\n\n\n\n<li><strong>Non-Participating Preferred Shares:<\/strong> These shares are entitled only to their fixed dividend and do not share in any additional profits or dividends beyond that fixed amount.<\/li>\n<\/ul>\n\n\n\n<p>Given these characteristics, Flint Corporation&#8217;s preferred shareholders are entitled only to the current year&#8217;s fixed dividend of $7 per share, totaling $22,330. The remaining earnings designated for dividends, amounting to $79,270, are then distributed among common shareholders, resulting in approximately $9.11 per common share.<\/p>\n\n\n\n<p>This allocation ensures that preferred shareholders receive their stipulated dividends first, with common shareholders receiving the residual amount, reflecting the typical hierarchy in dividend distribution.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>The outstanding share capital of Flint Corporation consists of 3,190 preferred shares and 8,700 common shares for which $261,000 was received. The preferred shares carry a dividend of $7 per share and have a $100 stated value. (a) Assuming that the company has retained earnings of $101,600 that is to be entirely paid out in [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"default","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","ast-disable-related-posts":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"footnotes":""},"categories":[25],"tags":[],"class_list":["post-196864","post","type-post","status-publish","format-standard","hentry","category-exams-certification"],"_links":{"self":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts\/196864","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/comments?post=196864"}],"version-history":[{"count":0,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts\/196864\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/media?parent=196864"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/categories?post=196864"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/tags?post=196864"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}