18

E. It is assumed that the corporation has $800,000 of 5% preferred stock and $3,200,000 of common stock outstanding, each having a par value of $10. No dividends have been declared for 2016 and 2017. As of 12/31/18, the corporation plans to distribute $450,000 in dividends. a) How much will the preferred stockholders receive if their stock is cumulative and nonparticipating? b) How much will common shareholders receive? c) What is the dividend per common share?

) Preferred = $120,000 ($800,000 x .05 x 3 yrs.) b) Common = 450,000-120,000 = 330,000 c) Number of common shares = 3,200,000/10 = 320,000 Dividend per common share =$330,000/ 320,000 = $1.03

(b) Sold 300 of the shares of treasury stock at $65 per share.

Cash 19500 treasury stock 18000 PIC Ts 1500

common stock dividend was declared

Retained Earnings ----------Common Stock Dividend Distributable ----------Paid-in Capital in Excess of Par

A total cash dividend of $90,000 was declared and payable to stockholders of record. Record dividends payable on common and preferred stock in separate accounts. Preferred stock is noncumulative and nonparticipating.

Retained Earnings....................................................................... 90,000 Dividends Payable—Preferred ($300,000 × .05).......... 15,000 Dividends Payable—Common ..................................... 75,000

4. Which of the following represents the total number of shares that a corporation may issue under the terms of its charter?

a. Authorized shares

10. The balance in Common Stock Dividend Distributable should be reported as a(n)

addition to capital stock

1. In a corporate form of business organization, legal capital is best defined as

b. the par value of all capital stock issued.

6. When treasury stock is purchased for more than the par value of the stock and the cost method is used to account for treasury stock, what account(s) should be debited?

c. Treasury stock for the purchase price.

2. Total stockholders' equity represents

c. a claim against a portion of the total assets of a company.

Penne Pharmaceuticals sold 17 million shares of its $1 par common stock to provide funds for research and development. If the issue price is $14 per share, what is the journal entry to record the sale of the shares?

cash 238 common stock 17 pic 221

(c) Sold the remaining shares of treasury stock at $57 per share.

cash 5,700 PIC Ts 300 treasury stock 6000

3. 6,000 shares of preferred stock are sold for cash at $110 per share.

cash 660,000 PS (6,000 *100) 600,000 PS CS 60,000

3. Stockholders' equity is generally classified into two major categories:

d. earned capital and contributed capital.

8. An entry is not made on the

date of record

9. Berg Corporation issued a 100% stock dividend of its common stock which had a par value of $10 before and after the dividend. At what amount should retained earnings be capitalized for the additional shares issued?

par value

7. Cumulative preferred dividends in arrears should be shown in a corporation's balance sheet

footnote

12,000 shares of common stock are issued to the founders of the corporation for land valued by the board of directors at $400,000. The board establishes a stated value of $10 a share for the common stock. Stock issuance costs associated with this issue are $15,000

land 400,000 common stock 120,000 PIC cs 280,000 pic from stock 15000 cash 15000