91Ó°ÊÓ

Dividend refers to remuneration, cash, or something else that a company pays to its shareholders. Dividends can be issued in various forms, such as cash payments, stocks, or any other frame. A company's profits are chosen by its executive board and require the support of shareholders.

The cumulative dividend of $180,000 is disclosed in a note to the equity section, it is not reported as a liability.

Working Notes:

Calculation of Cumulative Dividend

$\begin{array}{rcl}Cumulativedividend& =& (Share×Parvalue×Preferencedividendrate)×Pershare\\ & =& (10,000×100×6\%)×3\\ & =& \$60,000×3\\ & =& \$180,000\end{array}$

Working Notes:

Calculation of Share Capital-Ordinary

$\begin{array}{rcl}\mathrm{Share}\mathrm{capital}-\mathrm{Ordinary}& =& \mathrm{Shares}×\mathrm{Convertible}\mathrm{shares}×\mathrm{Par}\mathrm{value}\\ & =& 3,000×7×\$10\\ & =& \$210,000\end{array}$

Calculation of share capital –Preference

$\begin{array}{rcl}\mathrm{Share}\mathrm{capital}-\mathrm{preference}& =& \mathrm{share}×\mathrm{Par}\mathrm{value}\\ & =& 300×\$100\\ & =& \$300,000\end{array}$

Working Notes:

Calculation of Premium-Preference

$\begin{array}{rcl}\mathrm{Share}\mathrm{premium}\mathrm{preference}& =& \mathrm{Shares}×\mathrm{Premium}\mathrm{value}\mathrm{per}\mathrm{share}\\ & =& 10,000×\$7\\ & =& \$70,000\end{array}$