Answer:
a. $20,000
Explanation:
As for the information provided,
Total shares outstanding preference cumulative in nature = 6% 10,000 shares of $100 each = 6% $1,000,000
Dividend for each year = $60,000
Equity = 20,000 shares of $1 each = $20,000
Since no dividend is paid in 2012, the preference dividend will be in arrears for 2012 = $60,000
Dividend in 2013 = Dividend to preference for 2012, and for 2013
= $60,000 + $60,000 = $120,000
Since dividend paid = $100,000
$20,000 of preference dividend for 2013 stands in arrears.
Dividend in 2014 = $100,000
This shall be first used to pay dividend in arrears = $100,000 - $20,000 = $80,000
From this first dividend to preference for 2014 will be paid = $80,000 - $60,000 = $20,000
Now this $20,000 will be paid to equity as dividend.
