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A corporation declares dividends of $2 per share on 10,000 preference shares outstanding and $0.50 per share on 24,000 ordinary shares outstanding. What total cash dividend is recorded?
A$32,000
B$20,000
C$12,000
D$34,000
Answer & Solution
Correct answer: A. $32,000
1. Preference dividend = $10{,}000 \times \$2 = \$20{,}000$.
2. Ordinary dividend = $24{,}000 \times \$0.50 = \$12{,}000$.
3. Total = $\$20{,}000 + \$12{,}000 = \$32{,}000$.
4. Both classes are combined into one declaration entry of $32,000.
_Source: Jonick, Principles of Financial Accounting (CC BY-SA 4.0), §6.5 "Cash Dividends", p.253_
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