Question

#1

Sabas Company has 20,000 shares of $100 par, 2% cumulative preferred stock and 100,000 shares of $50 par common stock. The following amounts were distributed as dividends: Year 1: $10,000 Year 2: 45,000 Year 3: 90,000 Determine the dividends per share for preferred and common stock for the THIRD year.

a. $3.25 and $0.25

b. $4.50 and $0.90

c. $4.50 and $0.25

d. $2.00 and $0.25

#2

Alma Corp. issues 1,790 shares of $12 par common stock at $17 per share. When the transaction is recorded, credit(s) are made to

a.Common Stock $8,950 and Retained Earnings $21,480.

b.Common Stock $21,480 and Paid-in Capital in Excess of Stated Value $8,950.

c.Common Stock $30,430.

d.Common Stock $21,480 and Paid-in Capital in Excess of Par Value $8,950.

#3

The charter of a corporation provides for the issuance of 86,264 shares of common stock. Assume that 38,645 shares were originally issued and 4,844 were subsequently reacquired. What is the amount of cash dividends to be paid if a $2 per share dividend is declared?

a.$9,688

b.$77,290

c.$172,528

d.$67,602

#4

If Dakota Company issues 2,200 shares of $6 par common stock for $46,200,

a.Common Stock will be credited for $46,200.

b.Cash will be debited for $13,200.

c.Paid-in Capital in excess of Par Value will be credited for $13,200.

d.Paid-in Capital in excess of Par Value will be credited for $33,000.

Answer 1

1
Annual preferred dividends	40000	=20000*100*2%
Arrear preferred dividends at the end of year 1	30000	=40000-10000
Arrear preferred dividends at the end of year 2	25000	=(40000+30000)-45000
Preferred dividends in Year 3	65000	=40000+25000
Common dividends in Year 3	25000	=90000-65000
Dividends per share for preferred stock	3.25	=65000/20000
Dividends per share for common stock	0.25	=25000/100000
Option a $3.25 and $0.25 is correct
2
Credit to Common Stock	21480	=1790*12
Credit to Paid-in Capital in Excess of Par Value	8950	=1790*(17-12)
Option D is correct
3
Amount of cash dividends	67602	=(38645-4844)*2
Option D $67,602 is correct
4
Paid-in Capital in excess of Par Value will be credited for	33000	=46200-(2200*6)
Option D is correct