![Horngren's Accounting: The Managerial Chapters (12th Edition) (loose Leaf Version)](https://www.bartleby.com/isbn_cover_images/9780134486826/9780134486826_largeCoverImage.gif)
Concept explainers
Computing dividends on preferred and common stock and journalizing
Learning Objective 4
1. Preferred Dividend 2018 $9,000
Northern Communications has the following
Stockholders' Equity Paid-ln Capital:Preferred Stock —5%, $11 Par Value; 150,000 shares authorized, 20,000 shares issued and outstanding $ 220,000 Common Stock—$2 Par Value; 575,000 shares authorized, 380,000 shares issued and outstanding 760,000 Paid-In Capital in Excess of Par—Common 680,000 Total Paid-In Capital 1,660,000Retained Earnings 200,000 Total Stockholders' Equity $ 1,860,000
Requirements
1. Assuming the preferred stock is cumulative, compute the amount of dividends to preferred stockholders and to common stockholders for 2018 and 2019 if total dividends are $9,000 in 2018 and $45,000 in 2019. Assume no changes in preferred stock and common stock in 2019.
2. Record the
![Check Mark](/static/check-mark.png)
Want to see the full answer?
Check out a sample textbook solution![Blurred answer](/static/blurred-answer.jpg)
Chapter 13 Solutions
Horngren's Accounting: The Managerial Chapters (12th Edition) (loose Leaf Version)
- Preferred Dividends Eastern Inc.s equity includes 8%, $25 par preferred stock. There are 100,000 shares authorized and 45,000 shares outstanding. Assume that Eastern declares and pays preferred dividends quarterly. Required: Prepare the journal entry to record declaration of one quarterly dividend. Prepare the journal entry to record payment of the one quarterly dividend.arrow_forwardStock Dividends Crystal Corporation has the following information regarding its common stock: S10 par. with 500.000 shares authorized, 213,000 shares issued, and 183,700 shares outstanding. On August 22, 2019, Crystal declared and paid a 15% stock dividend when the market price of the common stock was $30 per share. Required: Prepare the journal entries to record declaration and payment of this stock dividend. Prepare the journal entries to record declaration and payment assuming it was a 30% stock dividend.arrow_forwardOutstanding Stock Lars Corporation shows the following information in the stockholders equity section of its balance sheet: The par value of common stock is S5, and the total balance in the Common Stock account is $225,000. There are 13,000 shares of treasury stock. Required: What is the number of shares outstanding? Use the following information for Exercises 10-58 and 10-59: Stahl Company was incorporated as a new business on January 1, 2019. The company is authorized to issue 600,000 shares of $2 par value common stock and 80,000 shares of 6%, S20 par value, cumulative preferred stock. On January 1, 2019, the company issued 75,000 shares of common stock for $15 per share and 5,000 shares of preferred stock for $25 per share. Net income for the year ended December 31, 2019, was $500,000.arrow_forward
- Cash Dividends on Common and Preferred Stock Lemon Inc. has the following information regarding its preferred and common stock: Preferred stock, S30 par, 12% cumulative; 300,000 shares authorized; 150,000 shares issued and outstanding Common stock, $2 par; 2,500,000 shares authorized; 1,200,000 shares issued; 1,000,000 outstanding As of December 31, 2019, Lemon was 3 years in arrears on its dividends. During 2020, Lemon declared and paid dividends. As a result, the common stockholders received dividends of $0.45 per share. Required: What was the total amount of dividends declared and paid? What journal entry was made at the date of declaration?arrow_forwardSelected transactions completed by Equinox Products Inc. during the fiscal year ended December 31, 2016, were as follows: a. Issued 15,000 shares of 20 par common stock at 30, receiving cash. b. Issued 4, 000 shares of 80 par preferred 5% stock at 100, receiving cash. c. Issued 500,000 of 10-year, 5% bonds at 104, with interest payable semiannually. d. Declared a quarterly dividend of 0.50 per share on common stock and 1.00 per share on preferred stock. On the date of record, 100,000 shares of common stock were outstanding, no treasury shares were held, and 20,000 shares of preferred stock were outstanding. e. Paid the cash dividends declared in (d). f. Purchased 7,500 shares of Solstice Corp. at 40 per share, plus a 150 brokerage commission. The investment is classified as an available-for-sale investment. g. Purchased 8,000 shares of treasury common stock at 33 per share. h. Purchased 40,000 shares of Pinkberry Co. stock directly from the founders for 24 per share. Pinkberry has 125,000 shares issued and outstanding. Equinox Products Inc. treated the investment as an equity method investment. i. Declared a 1.00 quarterly cash dividend per share on preferred stock. On the date of record, 20,000 shares of preferred stock had been issued. j. Paid the cash dividends to the preferred stockholders. k. Received 27,500 dividend from Pinkberry Co. investment in (h). l. Purchased 90,000 of Dream Inc. 10-year, 5% bonds, directly from the issuing company, at their face amount plus accrued interest of 37 5. The bonds are classified as a held-to-maturity long -term investment. m. Sold, at 38 per share, 2,600 shares of treasury common stock purchased in (g). n. Received a dividend of 0 .60 per share from the Solstice Corp. investment in (f). o. Sold 1,000 shares of Solstice Corp. at 45, including commission. p. Recorded the payment of semiannual interest on the bonds issue d in (c) and the amortization of the premium for six months. The amortization is determined using the straight-line method . q. Accrued interest for three months on the Dream Inc. bonds purchased in (I). r. Pinkberry Co. recorded total earnings of 240 ,000. Equinox Products recorded equity earnings for its share of Pinkberry Co. net income. s. The fair value for Solstice Corp. stock was 39. 02 per share on December 31, 2016. The investment is adjusted to fair value , using a valuation allowance account. Assume Valuation Allowance for Available-for-Sale Investments h ad a beginning balance of zero. Instructions 1. Journalize the selected transactions. 2. After all of the transaction s for the year ended December 31, 201 6, had been poste d [including the transactions recorded in part (1) and all adjusting entries), the data that follows were taken from the records of Equinox Products Inc. a. Prepare a multiple-step in come statement for the year ended December 31, 201 6, concluding with earnings per share . In computing earnings per share, assume that the average number of common shares outstanding was 100,000 and preferred dividends were 100,000. ( Round earnings per share to the nearest cent.) b. Prepare a retained earnings statement for the year ended December 31, 20 6. c. Prepare a balance sheet in report form as of December 31, 2016.arrow_forwardReporting Stockholders Equity Using the following accounts and balances, prepare the Stockhalders' Equity section of the balance sheet using Method 1 of Exhibit 8. 50,000 shares of common stock authorized, and 2,000 shares have been reacquired. Comman Stock, $sa0 par $3,200,000 Paid-In Capital from Sale of Treasury Stock Paid-in Capital in Excess of Par-Common Stock 64,000 440,000 Retained Earnings 1,728,000 Treasury Stock 42,000 Stockholders' Equity Paid-In Capital: Common Stock, S80 Par 3200,000 Excess over par 440,000 Treasury Stock From Sale of Treasury Stock 64.000 Total Paid-in Capital 3,704.000 Retained Eamings Total Treasury Stock Total Stockholders' Equityarrow_forward
- NAME: SCORE: SECTION: PROFESSOR: Problem #9 Issuance of Shares B. Sorima Corporation began operations on Jan. 1, 2018. The following transactions relating to shareholders' equity occurred in the first two years of the corporation's operations: 2018 Authorized the issuance of 2 million shares of P5 par value ordinary shares and 100,000 shares of P100 par value, 10% cumulative preference shares. Issued 200,000 shares of ordinary shares for P12 cash per share. Issued 100,000 shares of ordinary shares in exchange for a building valued at P820,000 and merchandise inventory valued at P380,000. Paid P10,000 cash to the corporation's founders for organization activities. Jan. 1 Jan. 2 Jan. 3 Jan. 4 Jan. 5 Issued 12,000 shares of preference shares for P110 cash per share. 2019 June 4 Issued 100,000 shares of ordinary shares for P15 cash per share. Required: 1. Prepare the journal entries to record these transactions. 2. Prepare the share capital section of the shareholders' equity as at Dec.…arrow_forwardQuèstion 1 On January 1, 2018, Manama Company has 8% 80,000 shares of $10 par value, Cumulative preferred stock and 140,000 shares of common stock authorized, issued and outstanding at $5 par value. The Company declared and paid cash dividends as follows: Year Dividends $50,000 $110,000 $190,000 2018 2019 2020 Required: In the below table, determine the amount of cash dividends distributed to each class of shares over the three years. Please: Present each year in a separate line.arrow_forwardNAME: SCORE: SECTION: PROFESSOR: Problem #10 Share Dividends and Share Splits On Jan. 1, 2019, the records of Matuguinas Corporation showed the following balances: Ordinary Shares, P1 par Share Premium-Ordinary Retained Earnings P 80,000 920,000 760,000 On Jan. 15, 2019, the board of directors declared a 3% share dividend; the stock's market price was P50 per share. On Nov. 4, 2019, the board of directors declared a 2- for-1 share split; the stock's market price was P90 per share. Required: 1. How many shares of stock were outstanding on Jan. 1, Mar. 31, and Dec. 31, 2019 assuming no other events related to shareholders' equity occurred? 2. What effect did the share dividends have on total shareholders' equity? 3. Prepare the entries for these two events. 4. Why would a corporation declare a share split? 5. What would the second entry have been if the corporation had declared a 100% share dividend instead of a 2-for-1 share split? :. - -arrow_forward
- Jan. 1 Brooklyn Trading Inc. opened with the following stockholders' investments: Name Investment Stock Type Michael Grant $ 120,000 Common Stock Theresa Jones $ 120,000 50% Common 50% Preferred Note: Common Stock Par Value $1.00 Preferred Stock Par Value: $ 5.00 Jan. 1 Paid $90,000 to a real estate company the rent for a one-year period beginning on Jan. 1, 2022. Jan. 3 Issued 30,000 shares of $1 par common stock and sold them at $ 25 per share. Jan. 4 Purchased a delivery truck from Kia Motors Co. $45,000 cash. The useful life is 7 years and its residual value $ 1,500. Jan. 5 Issued 20,000 shares of $ 5 par preferred stock and sold them at $35 per share. Jan. 6 Purchased Office Equipment from BJ's $5,000 on account. Jan. 7 Bought merchandise on account $75,000 from Samsung, terms: n/30. The company uses the perpetual inventory system. Jan. 9 Credit sales totaled $50,000. The cost of goods sold was $20,000. Jan. 16 Paid $ 5,000 on Insurance for the store building for the month of…arrow_forwardMotorsG Company shareholder's equity accounts Jan. 1, 2023: Common stock capital, $5 par: 2,000,000 Preference stock capital, 6% cumulative, $100 par: 5,000,000 Retained earnings: 1,500,000 In the years 2022 and 2023 the number of common and preference stocks issued were the same. In 2022 a cash dividend of $400,000 was declared while $500,000 was declared in 2023. If no dividends were paid to preference shareholders in Dec. 31, 2021, how much cash dividend must be allocated to preference stocks in 2023? Holding the same given above, but instead, the preference stock capital is non-cumulative. If no dividends were paid to preference shareholders in Dec. 31, 2021, how much cash dividend must be allocated to common stocks in 2023?arrow_forwardQuestion #4 Arm and Hammer Construction Company, Inc. had these transactions during June through December 2019. June 1st Issued 62,000 shares of $3 stated value common stock for cash at $8 per share. July 1st Issued 3,000 shares of 4% $100 par value preferred stock for cash at $75 per share. October 1st Purchased 2,000 shares of common stock previously issued on June 1st for $10 per share. November 1st Declared a cash dividend of $2 per share on the preferred stock, and 50 cents per share on the common stock. Hint: dividends cannot be declared or paid on any shares of treasury stock held by the company. December 15th paid the preferred stock and common stock dividends declared on November 1st. Required Prepare journal entries for the above transactions.arrow_forward
- Cornerstones of Financial AccountingAccountingISBN:9781337690881Author:Jay Rich, Jeff JonesPublisher:Cengage LearningIntermediate Accounting: Reporting And AnalysisAccountingISBN:9781337788281Author:James M. Wahlen, Jefferson P. Jones, Donald PagachPublisher:Cengage Learning
- Century 21 Accounting Multicolumn JournalAccountingISBN:9781337679503Author:GilbertsonPublisher:CengageFinancial Accounting: The Impact on Decision Make...AccountingISBN:9781305654174Author:Gary A. Porter, Curtis L. NortonPublisher:Cengage LearningAccounting (Text Only)AccountingISBN:9781285743615Author:Carl Warren, James M. Reeve, Jonathan DuchacPublisher:Cengage Learning
![Text book image](https://www.bartleby.com/isbn_cover_images/9781337690881/9781337690881_smallCoverImage.gif)
![Text book image](https://www.bartleby.com/isbn_cover_images/9781337788281/9781337788281_smallCoverImage.jpg)
![Text book image](https://www.bartleby.com/isbn_cover_images/9781305654174/9781305654174_smallCoverImage.gif)
![Text book image](https://www.bartleby.com/isbn_cover_images/9781285743615/9781285743615_smallCoverImage.gif)