Non-Cumulative Preference Shares= These shares entitle the holders only to the payment of

current dividends, if and when dividends are declared, to the extent of the preference rate,
before the ordinary shareholders are paid. If there is no dividend declaration for a certain
year, then the dividend for that year is forfeited.

Cumulative Preference Shares= These shares entitle the holder to payment not only of
current dividends but also of back dividends or dividends in arrears, if and when dividends
are declared, before the ordinary shareholders are paid.

Non-Participating Preference Shares= These shares entitle the holders only to the extent of
the stipulated preference dividend.

Participating Preference Shares= These shares entitle the holders to participate with the
holders of ordinary shares pro-rata in the remainder after the ordinary shareholders have
received their initial share based on the preference rate.

Illustration. DomDane Publishers, Inc. the premier publisher of college accounting, taxation
and math textbooks, has the following selected accounts in its shareholders’ equity:

12% Preference shares, P 100 par, authorized

4, 000 shares, 2, 000 shares issued and outstanding P 200, 000
Ordinary Shares, P 100 par, authorized 6, 000
Shares, 3, 000 shares issued and outstanding 300, 000
Retained Earnings 260, 000

The board failed to declare dividends for the past two years. The current year’s results of
operations gave the board reasons to declare cash dividends of P 200, 000.

REQUIREMENT: Determine the amount of dividends distributed to the ORDINARY

SHAREHOLDERS and PREFERENCE SHAREHOLDERS under each of the following cases:

Case 1. Non-cumulative and Non-participating Preference shares

Case 2. Non-Cumulative and Participating Preference Shares
Case 3. Cumulative and Non-participating Preference Shares
Case 4. Cumulative and Participating Preference Shares