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 first year.

a.$2.00 and $0.00

b.$0.00 and $0.10

c.$0.50 and $0.00

d.$0.50 and $0.10

2. When Wisconsin Corporation was formed on January 1, the corporate charter provided for 100,200 shares of $8 par value common stock. The following transaction was among those engaged in by the corporation during its first month of operation: The corporation issued 7,310 shares of stock at a price of $22 per share.

The entry to record the above transaction would include a

a.debit to Cash for $58,480

b.credit to Common Stock for $160,820

c.credit to Paid-in Capital in Excess of Par for $102,340

d.debit to Common Stock for $100,200

3.

The Sneed Corporation issues 9,600 shares of $47 par preferred stock for cash at $64 per share. The entry to record the transaction will consist of a debit to Cash for $614,400 and a credit or credits to

a.Preferred stock for $451,200 and Paid-in Capital in Excess of Par Value−Preferred Stock for $163,200.

b.Preferred Stock for $451,200 and Retained Earnings for $163,200.

c.Paid-in Capital from Preferred Stock for $614,400.

d.Preferred Stock for $614,400.

4.

Alma Corp. issues 2,830 shares of $12 par common stock at $18 per share. When the transaction is recorded, credit(s) are made to

a.Common Stock $33,960 and Paid-in Capital in Excess of Stated Value $16,980.

b.Common Stock $33,960 and Paid-in Capital in Excess of Par Value $16,980.

c.Common Stock $16,980 and Retained Earnings $33,960.

d.Common Stock $50,940.

Answer 1

1		Par value per	Divdiend	Dividend per	Number of	Preferred Dividend
		Preferred share	Rate	Preferred share	Preferred share	for 1 year
	Calculation of Preferred Dividend	$100	2%	$2.00	20,000	$40,000
		Year 1
	Total Cash Dividend	$10,000
	Dividend paid to preferred shareholders	$10,000
	Dividend paid to equity shareholders	$0
	Preferred Dividend per share =$10,000 / 20,000 shares =$0.50
	Dividend to common shareholders =$0
	So Option C is answer
2	The journal entry shall be:
	Cash(7,310 shares*$22)	$1,60,820
	Common Stock, $8 par value(7,310 shares*$8)		$58,480
	Paid-in capital in excess of par-Common stock		$1,02,340
	So Option C is answer
3	Cash(9,600 shares*$64)	$6,14,400
	Preferred Stock, $47 par value(9,600 shares*$47)		$4,51,200
	Paid-in capital in excess of par-Common stock		$1,63,200
	So Option A is answer
4	Cash(2,830 shares*$18)	$50,940
	Common Stock, $12 par value(2,830 shares*$12)		$33,960
	Paid-in capital in excess of par-Common stock		$16,980
	So Option B is answer