In: Accounting
15. Lego, Inc., issued common stock in Year 1. It issued 10,000 shares of 8%, $100 par value cumulative preferred stock for $110 per share at the beginning of Year 4. It did not pay any dividends during Year 4. In December of Year 5, it declares total dividends of $200,000. How much will the preferred stockholders of Lego receive as dividends in Year 5?
• $200,000
• $160,000
• $80,000
• $40,000
16. Marine Corporation issued common stock in Year 1. It issued 10,000 shares of 10%, $100 par value noncumulative preferred stock for $110 per share at the beginning of Year 3. It did not pay any dividends in Year 3 or Year 4. In December of Year 5, it declares total dividends of $250,000. How much will the common stockholders of Marine Corporation receive as dividends in Year 5?
• $150,000
• $250,000
• $50,000
• $100,000
19. The Common Stock account increases when treasury stock is resold for more than its original cost.
• true
• false
9. Dividends paid are allocated according to the percentage of shares owned by each stockholder.
15. $160000
The dividend is calculated on Face value of shares and cumulative preference shares have benefit of receiving accumulated dividend from previous years.
Dividend for lego inc preference holders = 10000 X $100 X 8% = 80000 for one year
The company has not paid dividend for 2 years. so total dividend is $80000 X 2 = $160000
16. $150,000
Since the shares does not have cumulative benefit, dividend for the year of declaration only is entitled by preference holders.
Dividend for preference holders = 10000 X 100. X 10% = $ 100000
Dividend for common stock holder = Declared - Dividend for Preference holders = $2,50,000 - $ 1,00,000 = $1,50,000
19. False
When shares are sold above the face value the excess amount above face value is credited in share premium account. so common stock wont have change when shares are resold.
9. True
Dividend paid are alloctaed using number of shares hold by shareholders, same is allocation on the basis of percentage of shares hold by them.