A corporation with both preferred stock and common stock outstanding has a substantial credit balance in its retained earnings account at the beginning of the current fiscal year. Although net income for the current year is sufficient to pay the preferred dividend of $150,000 each quarter and a common dividend of $90,000 each quarter, the board of directors declares dividends only on the preferred stock. Suggest possible reasons for not paying dividends on the common stock
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A corporation with both
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- All of the following statements pertain to dividends. Which of them is (are) true? a. Shareholders vote each year to declare and set the amount of the dividends to be paid.b. Dividends Payable is a current liability in the statement of financial position of the corporation.c. A 10% dividend on preference share capital means that each shareholder receives a cash dividend equal to 10% of the market value of the stock.d. All of these statements are true.A corporation is authorized to issue both ordinary and cumulative, non- participating preference shares. It declared a cash dividend this year; No dividends had been declared for the previous two years prior to this year's declaration. The total dividends declared is large enough to distribute dividends for this year and the previous two years. Which of the following statements is CORRECT? Only preference shareholders should receive dividends-in-arrears. O Both preference and ordinary shareholders should receive dividends-in-arrears. O Only ordinary shareholders should receive dividends-in-arrears. O Neither preference nor ordinary shareholders should receive dividends-in-arrears.In an audit of stockholders’ equity which among the following is a correct application of generally accepted accounting principles? a. Retired treasury shares are deducted from the shareholders’ equity of the company 2. Subscriptions Receivable are deducted from the share capital account of the company except when they are collectible within one year. 3. Share Warrants Outstanding are included in the share capital account of the company. 4. All share capital transactions are recorded at their respective par values regardless of the prevailing market value of each share of stock.
- The charter of a corporation provides for the issuance of 114,964 shares of common stock. Assume that 44,309 shares were originally issued and 3,848 were subsequently reacquired. What is the amount of cash dividends to be paid if a $2-per-share dividend is declared?The charter of a corporation provides for the issuance of 105,588 shares of common stock. Assume that 41,103 shares were originally issued and $4,863 were subsequentially reacquired. What is the amount of cash dividends to be paid if a $2 per share dividend is declared?Discuss the accounting treatment, if any, that should be given to each of the following items in computing earnings per share of ordinary shares for financial statement reporting. d) The declaration of current dividends on cumulative preference shares. e) The acquisition of some of the corporation's outstanding ordinary shares during the current fiscal year. The shares were classified as treasury shares. f) A 2-for-1 share split of ordinary shares during the current fiscal year. g) A provision created out of retained earnings for a contingent liability from a possible lawsuit.
- A corporation declared a cash dividend on its ordinary shares on Dec. 15, 2018, payable on Jan. 12, 2019. How would this dividend affect shareholders’ equity on the following dates? dec. 15, 2018 Dec 31, 2018 Jan. 12, 2019 A. Decrease No effect Decrease B. Decrease No effect No effect C. No effect Decrease No effect D. No effect No effect Decrease explain why the other choices are not the answers.Before preparing financial statements for the current year, the chief accountant for Wildhorse Ltd. provided the following information regarding the accounting for dividends and stock splits: 1. 2 3. 1. 2. Wildhorse has 18,800, $4 noncumulative preferred shares issued. It paid the preferred shareholders the quarterly dividend, and recorded it as a debit to Dividends Expense and a credit to Cash. Determine if each of the above transactions was recorded correctly and, if not, prepare the correct entry. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry for the account titles and enter o for the amounts. List all debit entries before credit entries.) 3. A 5% stock dividend (1,000 shares) was declared on the common shares when the fair value per share was $12. To record the declaration, Retained Earnings was debited and Dividends Payable was credited. The shares have not been issued yet. The…Earnings per ShareProgresso Corporation, one of the new audit clients, has not reported EPS data in its annual reports to stockholders in the past. The president requested that you furnish information about the reporting of EPS data in the current year’s annual report in accordance with GAAP.Required:a) Define the term earnings per share as it applies to corporation with a capitalization structure composed of only one class of common stock. Then explain how EPS should be computed and how the information should be disclosed in the corporation’s financial statements.b) Discuss the treatment, if any, that should be given to each of the following items in computing EPS for financial statement reporting:i. The declaration of current dividends on cumulative preferred stock.ii. The acquisition of some of the corporation’s outstanding common stockduring the current fiscal year (The stock was classified as treasury stock).iii. A two-for-one stock split of common stock during the current fiscal…
- Discuss the accounting treatment, if any, that should be given to each of the following items in computing earnings per share of ordinary shares for financial statement reporting. d. the declaration of current dividends on cumulative preference shares. e. the acquisition of some of the corporation's outstanding ordinary shares during the current fiscal year. the shares were classified as treasury shares. f. a 2-for-1 share split of ordinary shres during the current fiscal year. g. a provision created out of retained earnings for a contingent liability from a possible lawsuit.See the attached image for information:a. How many treasury shares are held by the corporation as of December 31, 2021? (Provide solution)b. How much is the total shareholders’ equity as of December 31, 2021? (Provide solution)The charter of a corporation provides for the issuance of 108,244 shares of common stock. Assume that 44,779 shares were originally issued and 4,084 were subsequently reacquired. What is the amount of cash dividends to be paid if a $2-per-share dividend is declared? a. $4,084 b. $44,779 c. $108,244 d. $81,390