Question

1.Casio Company has 30,000 shares of $1 par common stock issued and outstanding. The company also has 5,000 shares of $100 par 5% cumulative preferred stock outstanding. The company did not pay the preferred dividends in 2017, 2018 and 2019. On December 1, 2020, the company’s board of directors declared that $200,000 will be paid as dividend on January 17, 2021. What amount of dividends must the company pay the preferred shareholders? *

a)$100,000

b)$75,000

c)$50,000

d)$25,000

2.Casio Company has 30,000 shares of $1 par common stock issued and outstanding. The company also has 5,000 shares of $100 par 5% cumulative preferred stock outstanding. The company did not pay the preferred dividends in 2017, 2018 and 2019. On December 1, 2020, the company’s board of directors declared that $200,000 will be paid as dividend on January 17, 2021. What amount of dividends would common stockholders earn? *

a)$200,000

b)$150,000

c)$125,000

d)$100,000

3.All of the following are reported as current liabilities except *

a)Accounts payable

b)Notes payable

c)Mortgage payable

d)Taxes payable.

4.Linda's Boutique received $29,295 not including sales taxes. If the sales tax rate is 5%, what is Linda’s sales taxes payable for the month? *

a)$1,395

b)$1,464.75

c)$27,900

d)$29,295

5.A company’s promissory note is classified as a(n) *

a)Revenue

b)Expense

c)Current liability

d)Current asset

6.A small stock dividend is defined as *

a)less than 30% but greater than 25% of the corporation's issued stock

b)between 50% and 100% of the corporation's issued stock

c)less than 20–25% of the corporation's issued stock

d)more than 30% of the corporation's issued stock

7.Sales taxes collected by a retailer are recorded by *

a)crediting Sales Taxes Payable

b)crediting Sales Taxes Revenue

c)debiting Sales Taxes Expense

d)debiting Sales Taxes Payable

8.William Company is incorporated on January 1, 2018. During its first year, the corporation issued 20,000 shares of $10 par value preferred stock and 300,000 shares of $1 par value common. At December 31, 2018, the company declared $50,000 cash dividend to be paid on January 13, 2019. The record on declaration date will include: *

a)Debit Stock Dividend

b)Credit Cash Dividend

c)Debit Dividend Payable

d)Credit Dividend Payable

9.A company receives $1,000, of which $100 is for sales tax. The journal entry to record the sale would include a *

a)debit to Sales for $900

b)debit to Cash for $1,100

c)debit to Sales Tax Expense for $100

d)credit to Sales Tax Payable for $100

Answer 1

1)

Cumulative Preferred Dividend means the dividends to preferred shareholders are accumulated each year till the same is paid. Preferred shareholders have preference over common shareholders related to dividend payment. It means dividends are paid to preference shareholders first and then if balance left this will be paid to common shareholders.

Annual Preferred Dividend payable = 5,000 Shares * $100 par value * 5% preferred stock dividend rate

= $25,000

Accumulated Preferred Dividend for four years (2017 to 2019 and 2020) = $25,000 * 4 = $100,000

Hence, the company will pay preferred dividend first $100,000 and dividend to common stock holders are paid from balance amount.

Hence, the correct option is a) $100,000

2)

Refer solution of Part 1, Preferred Dividend $100,000 is paid in year 2020 and the balance $100,000 to be paid to common stockholders.

Hence, the correct option is D) $100,000

3)

Current liabilities are the obligation which needs to be paid by the organization within 12 months from the end of accounting year.

Mortgage Payable is a non current liability.

Hence, the correct option is c) Mortgage Payable

4)

Sales Tax Payable = $29,295 * 5% = $1,464.75

The correct option is b)$1,464.75

Hope the above calculations, working and explanations are clear to you and help you to understand the concept of question.... please rate my answer...in case any doubt, post a comment and I will try to resolve the doubt ASAP…thank you

Pls ask separate question for other parts problems