Xtreme Sports Has $100,000 of 8% Noncumulative, Nonparticipating, Preference Shares

Question 124
Multiple Choice

Xtreme Sports has $100,000 of 8% noncumulative, nonparticipating, preference shares outstanding. Xtreme Sports also has $500,000 of ordinary shares outstanding. In the company's first year of operation, no dividends were paid. During the second year, Xtreme Sports paid cash dividends of $30,000. This dividend should be distributed as follows: A) $8,000 preference; $22,000 ordinary. B) $16,000 preference; $14,000 ordinary. C) $7,500 preference; $22,500 ordinary. D) $15,000 preference; $15,000 ordinary. E) $0 preference; $30,000 ordinary.