A corporation's shareholders are not legally entitled to share in dividends unless its board of directors has declared these dividends. If dividends are not declared in a particular year, a holder of noncumulative preferred stock will never be paid the dividend for that year. Most preferred stock is cumulative preferred stock. If a corporation fails to declare a dividend on cumulative preferred stock at the stated rate on the usual dividend date, the amount becomes dividends in arrears. Dividends in arrears accumulate from period to period. A corporation cannot pay common shareholders any dividends until it has paid the preferred dividends in arrears. c. Preferred stock is fully participating and cumulative. Preferred dividends are 1 year in arrears at the beginning of the year. Andrews Company Schedule of dividends to be paid Preferred Common Dividends in arrears 20,000 Current preferred dividends 20,000 Common proportional share 20,000 Remainder shared Total 2. For 1(a), compute the dividend yield on the preferred stock and the common stock. If required, round your answers to one decimal place. Dividend yield Preferred stock Common stock %

A corporation's shareholders are not legally entitled to share in dividends unless its board of directors has declared these dividends. If dividends are not declared in a particular year, a holder of noncumulative preferred stock will never be paid the dividend for that year. Most preferred stock is cumulative preferred stock. If a corporation fails to declare a dividend on cumulative preferred stock at the stated rate on the usual dividend date, the amount becomes dividends in arrears. Dividends in arrears accumulate from period to period. A corporation cannot pay common shareholders any dividends until it has paid the preferred dividends in arrears. c. Preferred stock is fully participating and cumulative. Preferred dividends are 1 year in arrears at the beginning of the year. Andrews Company Schedule of dividends to be paid Preferred Common Dividends in arrears 20,000 Current preferred dividends 20,000 Common proportional share 20,000 Remainder shared Total 2. For 1(a), compute the dividend yield on the preferred stock and the common stock. If required, round your answers to one decimal place. Dividend yield Preferred stock Common stock %

SWFT Essntl Tax Individ/Bus Entities 2020

23rd Edition

ISBN:9780357391266

Author:Nellen

Publisher:Nellen

Chapter13: Corporations: Earning & Profits And Distributions

Section: Chapter Questions

Problem 29P

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Which of the following statements is true? The outstanding number of shares is the maximum number of shares that can be issued by a corporation. The shares that are in the hands of the stockholders are said to be outstanding. It is very unlikely that corporations will have more than one class of stock outstanding. Preferred stock is stock that has been retired.
If a corporation fails to declare a dividend on cumulative preferred stock in a given year, the dividends in arrears accumulate from period to period. the dividends in arrears are recorded as liabilities. the common shareholders may still receive dividends in the current year. all of these options apply.
In applying the Sec. 318 attribution rules to a stock redemption, the stock of a corporation is only deemed to be proportionately owned by the shareholder when the shareholder owns more than 50% of the corporate stock. This statement is True, correct?
When a corporation acquires its own shares, those shares assume the same status as authorized but unissued shares, as if they never had been issued. Explain how this is reflected in the accounting records if the shares are formally retired.
When a company retires its own common shares, the company must a. decrease the common share account balances by the original issue price. b. record a gain or loss depending on the difference between original selling price and repurchase cost. c. get the approval of the government to do so. d. issue a different class of shares to the former shareholders.
S1 When a corporation reacquired its own share due to delinquency and no bidders, the share must be retired immediately. S2 An ordinary shareholder receives, the same privileges and rights as preference shareholders. a. Both statements are true b. Both statements are false c. One statement is true, and the other one is false S1 A subscriptions receivable that are collectible within one year is part of shareholders equity. S2 Par value equity shares should not be issued for a consideration below P5.00 per share. a. Both statements are true b. Both statements are false c. One statement is true, and the other one is false
Identify all of the following statements that are correct with regards to dividends and stock splits: a. The record date is the date that will determine who is eligible to receive a dividend. b. When a stock split occurs, a share’s market value will decline and, initially, each shareholder’s wealth will decline. c. Companies are not required to declare and issue dividends to common shareholders, but companies are required to declare and issue a dividend to preferred shareholders. d. If a person holds 25% of the common shares in a company, they will receive 25% of the total dividends paid on common shares. e. Both cash dividends and stock dividends decrease shareholders’ equity. f. The advantage of a stock split is that it may increase the marketability of the shares by lowering the share price. g. The Canada Business Corporations Act requires that stock dividends be recorded at book value. h. When a stock dividend is declared, additional shares will be issued to each shareholder based…
6. These give the holders the privilege to purchase shares of stocks at a price lower than the prevailing market price of the shares upon the issuance of new shares. 7. The difference of if the issue price is less than the par or stated value of the share. 8. A corporation which has no share capital and where no part of its income is distributable as dividends to its members. 9. A private corporation tasked by the government to provide public service. 10. The SEC issues the certificate of incorporation after this document is filed and duly approved.
When estimating a firm's WACC, the cost of preferred stock to the firm must be adjusted to an after tax codt because at least 70% of dividends recieved by a corporation may be excluded from the corporation taxable income True or false
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.
From pages 10-2 and 10-3 of the VLN, when a corporation goes to the stock market and buys the corporation's stock, the stock becomes treasury stock. Which of the following statement is false regarding treasury stock? Group of answer choices A. Treasury stock is still part of the issued shares but they are no longer outstanding. B. Treasury stock has no effect on the common stock account. C. Treasury stock will receive dividends when the corporation declares them. D. Treasury stock is recorded at cost.
The corporation issued a 20% share dividend on its share capital. At what amount should retained earnings be reduced for this transaction? a. Zero because no effect in the total stockholders' equity b. Par Value c. Fair value at the date of issuance d. Fair value at the declaration date