15. Lego, Inc., issued common stock in Year 1. It issued 10,000 shares of 8%, $100...

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.

true
false

Solutions

Expert Solution

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.

ekkarill92 answered 1 year ago

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