Deck 3: Shareholders Equity

Question 1

Subscriptions Receivable are reported as

A) a non-current asset.
B) a current asset.
C) a deduction from shareholders' equity.
D) either a current asset or a deduction from shareholders' equity.

Answer 1

D

Question 2

Aye Corp. sells common shares on a subscription basis. The Common Shares account should be credited when the

A) shares are subscribed for.
B) first payment is made.
C) last payment is made.
D) last payment is made and the shares are issued.

Answer 2

D

Question 3

When all outstanding preferred shares are purchased and retired by the issuing corporation for less than the original issue price, accounting for the retirement increases

A) the amount of dividends available to common shareholders.
B) the contributed capital of the common shareholders.
C) reported income for the period.
D) Accumulated Other Comprehensive Income.

Answer 3

B

Question 4

Dividends on cumulative preferred shares

A) must be paid each year.
B) accumulate over the life of the shares and are paid on retirement.
C) must be paid before dividends may be paid on common shares.
D) if in arrears, must be calculated like compound interest.

Question 5

Total shareholders' equity represents

A) a claim to specific assets contributed by the owners.
B) the maximum amount that can be borrowed by the corporation.
C) a claim against a portion of the total assets of the corporation.
D) only the amount of earnings that have been retained in the corporation.

Question 6

The liability of shareholders is

A) similar to the liability of the owners of a partnership.
B) similar to the liability of the owner of a proprietorship.
C) equal to an amount sufficient to satisfy all creditors.
D) limited to their property or service invested in the corporation.

Question 7

The cumulative feature of preferred shares

A) limits the amount of cumulative dividends to the par value of the preferred shares.
B) requires that dividends not paid in any year must be made up in a later year before dividends are distributed to common shareholders.
C) means that the shareholder can accumulate preferred shares until they are equal to the stated value of common shares, at which time they can be converted into common shares.
D) enables a preferred shareholder to accumulate dividends until they equal the stated value of the shares and receive the shares in place of the cash dividends.

Question 8

Assuming a corporation has no contributed surplus booked, when shares are reacquired at a cost greater than their original issue price and cancelled, what account(s) should be debited?

A) the share account for the total cost
B) the share account for the original issue price and contributed surplus for the additional amount
C) the share account for the average per share amount and retained earnings for the additional amount
D) the share account for the average per share amount and a loss account for the additional amount

Question 9

When shares are reacquired at a cost less than the average per share value, the difference is credited to

A) the appropriate share capital account.
B) Gain on Reacquisition of Shares.
C) Retained Earnings.
D) Contributed Surplus.

Question 10

Preferred shares are often issued instead of debt

A) to avoid paying dividends to the common shareholders.
B) because a corporation's debt-to-equity ratio has become too high.
C) to increase the market value of the shares.
D) to decrease the market value of the shares.

Question 11

In jurisdictions where par value shares are legally allowed, the only real significance of par value is

A) to enable the shares to be callable or convertible.
B) to require the corporation to pay dividends.
C) to establish the maximum responsibility of a shareholder in the event of insolvency.
D) to establish the maximum price at which the shares can be sold.

Question 12

The accounting problem in a lump sum sale of shares is the allocation of the proceeds between the classes of securities. One acceptable method of allocation is the

A) pro forma method.
B) relative fair value method.
C) direct method.
D) indirect method.

Question 13

A possible result of the reacquisition and cancellation of shares by a corporation is that this may

A) directly increase but not decrease retained earnings.
B) increase net income if a gain is recognized.
C) directly decrease but not increase retained earnings.
D) decrease but not increase net income.

Question 14

The preemptive right enables a shareholder to

A) share proportionately in any new issues of shares in the same class.
B) receive cash dividends before other classes of shares without the preemptive right.
C) sell shares back to the corporation at the option of the shareholder.
D) receive the same amount of dividends on a percentage basis as the preferred shareholders.

Question 15

According to the CBCA, when a company purchases its own shares on the market

A) they are recorded with a debit to Repurchased Shares.
B) the amount paid is deducted from the share class to which they belong.
C) they must be cancelled.
D) the excess of purchase price over cost is a loss.

Question 16

Direct incremental costs incurred to sell shares such as underwriting costs should be accounted for as

A) a reduction of share capital.
B) an expense of the period in which the shares are issued.
C) an intangible asset.
D) a reduction of retained earnings.

Question 17

When shares are purchased or redeemed and cancelled, guidelines have been established for the sequence of accounts to adjust when allocating the cost. Which of the following is the first account to be adjusted?

A) a Contributed Surplus account created from a previous reacquisition of the same class of shares
B) the Share Capital account
C) Retained Earnings
D) Accumulated Other Comprehensive Income

Question 18

Which statement is correct regarding real estate income or investment trusts?

A) They are often set up as unlimited purpose trust funds.
B) They are considered to be special purpose entities.
C) The unitholders (investors) do not pay tax on the cash received from the trust.
D) The unitholders have unlimited liability.

Question 19

The residual interest in a corporation belongs to the

A) management.
B) creditors.
C) common shareholders.
D) preferred shareholders.

Question 20

Callable preferred shares

A) may be redeemed at any time at the shareholder's option.
B) may be called or redeemed at the option of the issuing corporation.
C) usually have voting rights.
D) have rights to participate in any new share issuance.

Question 21

As a minimum, how large in relation to total outstanding shares may a stock distribution be before it should be accounted for as a large stock dividend instead of as a small stock dividend?

A) no less than 2% to 5%
B) no less than 10% to 15%
C) no less than 20% to 25%
D) no less than 45% to 50%

Question 22

Declaration and issuance of a stock dividend

A) has no effect on total assets, liabilities, or shareholders' equity.
B) decreases the amount of working capital.
C) decreases total shareholders' equity.
D) increases the current ratio.

Question 23

The fair value of a property dividend should NOT be determined by

A) estimated realizable values in cash transactions involving similar assets.
B) quoted market prices.
C) independent appraisals.
D) arbitrary values assigned by the Board of Directors.

Question 24

The issuer of a 5% common stock dividend to common shareholders should transfer from retained earnings to contributed capital an amount equal to the

A) book value of the shares issued.
B) market value of the shares issued.
C) minimum legal requirements.
D) par or stated value of the shares issued.

Question 25

Which of the following transactions would NOT result in a decrease to retained earnings?

A) declaration and issuance of a stock dividend
B) incurrence of a net loss for the period
C) reacquisition of shares for less than the original issue price
D) correction of an error in which depreciation expense was understated in a prior period

Question 26

A mining company declared a liquidating dividend. The journal entry to record the declaration must include a debit to

A) Retained Earnings.
B) Contributed Capital.
C) Accumulated Other Comprehensive Income.
D) Dividend Payable.

Question 27

If a corporation wishes to "capitalize" part of their earnings, it may issue a

A) cash dividend.
B) stock dividend.
C) property dividend.
D) liquidating dividend.

Question 28

An entry for dividends is NOT made on the

A) date of declaration.
B) date of record.
C) date of payment (cash dividends).
D) date of distribution (stock dividends).

Question 29

What effect does the issuance of a 2-for-1 stock split have on each of the following?

Question 30

The balance in the Common Stock Dividend Distributable account should be reported as a(n)

A) deduction from the Common Shares account.
B) addition to contributed capital.
C) current liability.
D) contra-asset.

Question 31

Pryor Corporation issued a 2-for-1 common stock split. The shares had been originally issued at $ 10 per share. At what amount should retained earnings be capitalized for the additional shares issued?

A) There should be no capitalization of retained earnings.
B) $ 10 per share
C) market value on the declaration date
D) market value on the payment date

Question 32

Cash dividends are paid on the basis of the number of shares

A) authorized.
B) issued.
C) outstanding.
D) outstanding less the number of treasury shares.

Question 33

Which type of dividends do NOT reduce total shareholders' equity?

A) cash dividends
B) stock dividends
C) property dividends
D) liquidating dividends

Question 34

Jesse Corp. owns 4,000,000 shares of James Corp. On December 31, 2020, Jesse distributed these shares as a dividend to its shareholders. This is an example of a

A) property dividend.
B) stock dividend.
C) liquidating dividend.
D) cash dividend.

Question 35

A dividend which is a return to shareholders of a portion of their original capital investments is known as a

A) liquidating dividend.
B) property dividend.
C) cash dividend.
D) participating dividend.

Question 36

Which of the following transactions would NOT result in an increase to retained earnings?

A) correction of an error in which expenses were overstated in a previous year
B) issuance of a 3-for-1 stock split
C) retrospective application of a new accounting policy that results in higher net income in the previous year.
D) earning of net income for the period

Question 37

A feature common to both stock splits and stock dividends is

A) a transfer to earned capital of a corporation.
B) that there is no effect on total shareholders' equity.
C) an increase in total liabilities of a corporation.
D) a reduction in the contributed capital of a corporation.

Question 38

Which of the following statements is NOT generally true about the legality of dividend distributions?

A) No amounts may be distributed unless the corporate capital is left intact.
B) The corporation must still be able to pay its liabilities when they become due.
C) A corporation may not pay dividends that are higher than their legally available retained earnings.
D) Dividends do not need to be formally approved by the Board of Directors.

Question 39

Which of the following statements about property dividends is FALSE?

A) A property dividend is a nonreciprocal transfer of nonmonetary assets.
B) A property dividend is also called a dividend in kind.
C) The accounting for a property dividend should be based on the carrying value (book value) of the nonmonetary assets transferred.
D) The accounting for a property dividend should be based on the fair value of the nonmonetary assets transferred.

Question 40

The declaration and issuance of a stock dividend larger than 25% generally

A) increases common shares outstanding and increases total shareholders' equity.
B) increases retained earnings and increases total shareholders' equity.
C) may increase or decrease common shares but does not change total shareholders' equity.
D) decreases retained earnings but does not change total shareholders' equity.

Question 41

On May 1, 2020, when the market value of Jay Ltd.'s common shares was $ 15 per share, the corporation had 100,000 no par value common shares issued and outstanding. On this day, Jay declared and issued a 15% common stock dividend. As a result of this stock dividend, Jay's total shareholders' equity

A) increased by $ 225,000.
B) decreased by $ 225,000.
C) decreased by $ 15,000.
D) did not change.

Question 42

Use the following information to answer questions 55-56.
Berne Ltd. was organized on January 1, 2020, with 300,000 no par value common shares authorized. During 2020, the corporation had the following share transactions:
Jan 4 Issued 120,000 shares at $ 10 per share
Mar 8 Issued 40,000 shares at $ 11 per share
May 17 Purchased 15,000 shares at $ 12 per share and cancelled them
Jul 6 Issued 30,000 shares at $ 13 per share
Aug 27 Issued 10,000 shares at $ 14 per share
The total amount in the Common Shares account at December 31, 2020 is

A) $ 2,170,000.
B) $ 2,016,250.
C) $ 2,007,250.
D) $ 1,990,000.

Question 43

Berlin Corporation was organized on January 1, 2020, with 400,000 no par value common shares authorized. During 2020, the corporation had the following share transactions: Jan 5 Issued 150,000 shares at $ 10 per share
Apr 6 Issued 50,000 shares at $ 12 per share
Jun 8 Issued 50,000 shares at $ 14 per share
Jul 28 Purchased 20,000 shares at $ 11 per share and cancelled them
Dec 31 Issued 20,000 shares at $ 18 per share
What is the total amount of contributed surplus at December 31, 2020?

A) $ 0
B) $ 4,000
C) $ 20,000
D) $ 220,000

Question 44

Presented below is information related to Oistins Corporation: The total amount that will be added to the Common Shares account when the final subscriptions are received will be

A) $ 240,000.
B) $ 480,000.
C) $ 720,000.
D) cannot be determined from the information given.

Question 45

Use the following information to answer questions 57-58.
Minosh Corp. is authorized to issue 400,000 no par value common shares. Subscribers agree to purchase shares at $ 12 per share with a 30% down payment.
The journal entry to record the issuance of the shares upon receipt of the final instalment includes a

A) debit to Common Shares Subscribed for $ 900,000.
B) credit to Common Shares for $ 670,000.
C) credit to Common Shares for $ 270,000.
D) debit to Subscriptions Receivable for $ 670,000.

Question 46

A corporation declared a dividend, a portion of which was liquidating. How would this distribution affect each of the following?

Question 47

Dividends are NOT paid on

A) noncumulative preferred shares.
B) non-participating preferred shares.
C) treasury shares.
D) non-voting common shares.

Question 48

Noncumulative preferred dividends in arrears

A) must be paid before any other cash dividends can be distributed.
B) are not paid or disclosed.
C) are disclosed as a liability until paid.
D) are paid to preferred shareholders if sufficient funds remain after payment of the current preferred dividend.

Question 49

How would total shareholders' equity be affected by the declaration of each of the following?

Question 50

An investment in marketable securities was distributed to shareholders as a property dividend. The dividend should be recorded at the

A) fair value of the asset transferred or the book value of the asset transferred, whichever is higher.
B) fair value of the asset transferred or the book value of the asset transferred, whichever is lower.
C) fair value of the asset transferred.
D) book value of the asset transferred.

Question 51

Aye Corp. was organized in January 2020 with authorized capital of 1,000,000 no par value common shares. On February 1, 2020, shares were issued at $ 10 per share. On March 1, 2020, the corporation's lawyer accepted 7,000 common shares with a fair value of $ 85,000 in settlement for legal services. Total shareholders' equity would increase on

Question 52

Use the following information to answer questions 57-58.
Minosh Corp. is authorized to issue 400,000 no par value common shares. Subscribers agree to purchase shares at $ 12 per share with a 30% down payment.
Assume that subscribers agree to purchase 75,000 shares and make the required down payment. The journal entry to record receipt of the subscriptions includes a

A) debit to Common Shares Subscribed for $ 900,000.
B) credit to Common Shares Subscribed for $ 900,000.
C) credit to Common Shares for $ 270,000.
D) credit to Subscriptions Receivable for $ 670,000.

Question 53

On December 1, 2020, Dee Ltd. agreed to sell 40,000 of their no par common shares on a subscription basis. On that day, 25% of the subscription price was collected as a down payment, with the remaining 75% due in 2021. On the December 31, 2020 statement of financial position, the shareholders' equity section would report

A) common shares issued for 25% of the subscription price.
B) common shares issued for 100% of the subscription price less a subscription receivable for 75% of the subscription price.
C) common shares subscribed for 75% of the subscription price.
D) common shares subscribed for 100% of the subscription price less a subscription receivable for 75% of the subscription price.

Question 54

Emily Corp. owned shares in Carr Ltd. On December 1, 2020, Emily declared and distributed a property dividend of Carr shares when their fair value exceeded the carrying amount. As a consequence of the dividend declaration and distribution, the accounting effects would be Property Dividends

Question 55

Elves Ltd. owns 150,000 shares of Rogue Ltd. common shares, which are being accounting for by the equity method. On December 15, 2020, when Elves "Investment in Common Shares of Rogue Ltd." account has a carrying value of $ 7.50 per share, Elves declares all these shares to its shareholders as a property dividend, to be distributed on December 31, 2020. Elves had originally paid $ 12 for each share. Rogue has 1,500,000 shares issued and outstanding, for which the quoted market price was $ 10.50 per share on the declaration date and $ 13.50 per share on the distribution date. Ignoring income taxes, what would be the reduction in Elves' shareholders' equity as a result of the above transactions?

A) $ 1,125,000
B) $ 1,050,000
C) $ 1,200,000
D) $ 1,575,000

Question 56

How would the declaration of a 15% stock dividend affect each of the following?

Question 57

The dollar amount of a cash dividend to be paid is determined on the date of

A) record.
B) declaration.
C) declaration or date of record, whichever is earlier.
D) payment.

Question 58

Which of the following is NOT a valid reason for a stock split?

A) to increase the shareholder base by increasing the number of shares outstanding and making them more marketable
B) to reduce the market price of the shares so that more individuals can afford to invest in the shares
C) to increase the market price of the shares to make the stock more attractive
D) to reduce the market price of the shares to make the stock more attractive

Question 59

Frieds Corp. was organized on January 1, 2020, with the following authorized share capital: 20,000 common shares, no par value
15,000, $ .10, cumulative preferred shares, no par value
During 2020, the corporation issued 10,000 common shares for $ 700,000 and 10,000 preferred shares at $ 28 per share. On December 20, 2020, subscriptions for 1,000 preferred shares were taken at a purchase price of $ 30. These subscribed shares were paid for on January 2, 2021. What should Frieds report as total contributed capital on its December 31, 2020, balance sheet?

A) $ 280,000
B) $ 700,000
C) $ 980,000
D) $ 1,130,000

Question 60

Use the following information to answer questions 55-56.
Berne Ltd. was organized on January 1, 2020, with 300,000 no par value common shares authorized. During 2020, the corporation had the following share transactions:
Jan 4 Issued 120,000 shares at $ 10 per share
Mar 8 Issued 40,000 shares at $ 11 per share
May 17 Purchased 15,000 shares at $ 12 per share and cancelled them
Jul 6 Issued 30,000 shares at $ 13 per share
Aug 27 Issued 10,000 shares at $ 14 per share
The total amount of contributed surplus at December 31, 2020 is

A) $ 0.
B) $ 26,250.
C) $ 153,750.
D) $ 180,000.

Question 61

Sarajevo Ltd. currently has outstanding 20,000 no par value common shares with a carrying value of $ 200,000, and 10,000 no par value, $ 0.60, cumulative, fully participating preferred shares with a carrying value of $ 100,000. Dividends on the preferred shares are one year in arrears. Assuming that Sarajevo wishes to distribute $ 54,000 in dividends, the common shareholders will receive

A) $ 12,000.
B) $ 22,000.
C) $ 32,000.
D) $ 42,000.

Question 62

On January 1, 2020, when the market value of their common shares was $ 15 per share, Crooks Inc. declared a 10% common stock dividend. Shareholders' equity before the stock dividend was declared was: Common shares, no par value, authorized 300,000 shares, What was the effect on Crook's retained earnings as a result of the stock dividend?

A) $ 270,000 decrease
B) $ 450,000 decrease
C) $ 540,000 decrease
D) $ 750,000 decrease

Question 63

Use the following information for questions 74-76.
Instanbul Corp. has outstanding 20,000 no par value, $ 0.80, preferred shares and 100,000 no par value common shares. Dividends have been paid every year except last year and the current year. The carrying value of the preferred shares is $ 200,000 and of the common shares is $ 300,000.
If the preferred shares are cumulative and non-participating and $ 100,000 is distributed as a dividend, the common shareholders will receive

A) $ 0.
B) $ 68,000.
C) $ 84,000.
D) $ 100,000.

Question 64

The shareholders' equity of Tirana Ltd. at July 31, 2020 is presented below: Common shares, no par value, authorized 400,000 shares, On August 1, 2020, the board of directors declared a 10% stock dividend, to be distributed on September 15. The market price of Tirana's common shares was $ 35 on August 1 and $ 38 on September 15. What is the debit to retained earnings as a result of the declaration and distribution of this stock dividend?

A) $ 400,000
B) $ 700,000
C) $ 760,000
D) $ 1,400,000

Question 65

Cash dividends declared on the no par value common shares of Athens Corp. were as follows: The 4th quarter cash dividend was declared on December 20, 2020, to shareholders of record on December 31, 2020, to be paid on January 9, 2021. In addition, Athens declared a 10% common stock dividend on December 1, 2020, when there were 400,000 shares issued and outstanding, and the market value of the common shares was $ 16 per share. The shares were issued on December 21, 2020. What was the effect on Athens' shareholders' equity accounts during 2020 as a result of the above transactions?

Question 66

On July 1, 2020, Nehan Corp. issued 4,000 of its no par common shares and 8,000 of its no par preferred shares for a lump sum of $ 200,000. At this date Nehan's common shares were selling for $ 24 per share and the preferred shares for $ 18 per share. Using the relative fair value method, the amount of the proceeds allocated to the preferred shares account should be

A) $ 100,000.
B) $ 110,000.
C) $ 120,000.
D) $ 72,000.

Question 67

At December 31, 2019 and 2020, Gee Corp. had outstanding 3,000 no par value, $ 8, cumulative preferred shares and 10,000 no par value common shares. At December 31, 2019, dividends in arrears on the preferred shares were $ 12,000. Cash dividends declared in 2020 totalled $ 45,000. What amounts were payable on each class of shares?

Question 68

Use the following information for questions 74-76.
Instanbul Corp. has outstanding 20,000 no par value, $ 0.80, preferred shares and 100,000 no par value common shares. Dividends have been paid every year except last year and the current year. The carrying value of the preferred shares is $ 200,000 and of the common shares is $ 300,000.
If the preferred shares are cumulative and fully participating and $ 101,000 is distributed as a dividend, the common shareholders will receive

A) $ 0.
B) $ 51,000.
C) $ 61,000.
D) $ 69,000.

Question 69

Use the following information for questions 74-76.
Instanbul Corp. has outstanding 20,000 no par value, $ 0.80, preferred shares and 100,000 no par value common shares. Dividends have been paid every year except last year and the current year. The carrying value of the preferred shares is $ 200,000 and of the common shares is $ 300,000.
If the preferred shares are noncumulative and fully participating and $ 70,000 is distributed as a dividend, the common shareholders will receive

A) $ 0.
B) $ 42,000.
C) $ 46,000.
D) $ 54,000.

Question 70

On June 30, 2020, when Wenn Inc.'s shares were selling at $ 32 per share, its capital accounts were as follows: Common Shares, no par, 40,000 shares issued If a 5% stock dividend were declared and distributed, the Common Shares account balance would be

A) $ 3,064,000.
B) $ 1,500,000.
C) $ 1,564,000.
D) $ 2,600,000.

Question 71

Helix Corporation has 150,000 no par value common shares authorized, issued and outstanding. All 150,000 shares were issued at $ 80 per share. Retained earnings are $ 325,000. If 3,000 shares were reacquired at $ 99 and cancelled, shareholders' equity would decrease by

A) $ 0.
B) $ 57,000.
C) $ 240,000.
D) $ 297,000.

Question 72

Eff Ltd. was organized on January 2, 2020, with 100,000 no par value common shares authorized. During 2020, Eff had the following capital transactions: Jan 5 Issued 75,000 shares at $ 14 per share
Jul 27 Purchased and retired 5,000 shares at $ 10 per share
Nov 25 Issued 4,000 shares at $ 13 per share
What would be the balance in the Contributed Surplus account at December 31, 2020?

A) $ 0
B) $ 10,000
C) $ 20,000
D) $ 50,000

Question 73

The shareholders' equity section of Zagreb Corp. at December 31, 2019 was: Common shares, no par value; authorized 20,000 shares; On February 28, 2020, when the market value of Zagreb's shares was $ 12 per share, the board of directors declared a 15% stock dividend, and accordingly 1,500 additional shares were issued. For the two months ended February 28, 2020, Zagreb reported a net loss of $ 20,000.
What amount should Zagreb report as retained earnings at February 28, 2020?

A) $ 162,000
B) $ 180,000
C) $ 182,000
D) $ 198,000

Question 74

Minnick Corp. has 900,000 no par common shares authorized, of which 400,000 shares are outstanding. The average carrying value of the shares is $ 6 per share. When the market value was $ 10 per share, Miinick declared a 10% stock dividend. What entry, if any, should Minnick make to record this dividend declaration?

Question 75

Kryer Ltd. has 50,000 no par value common shares authorized, issued, and outstanding. All 50,000 shares were issued at $ 4 per share. Retained earnings are $ 60,000. If 5,000 common shares were reacquired at $ 3 and cancelled,

A) shareholders' equity would decrease $ 75,000.
B) contributed surplus would increase $ 5,000.
C) contributed surplus would decrease $ 5,000.
D) retained earnings would decrease $ 15,000.

Question 76

Use the following information for questions 70-72.
Riga Ltd. has outstanding 100,000 no par common shares and 20,000 no par, $ 0.40, preferred shares issued at $ 5 each. The preferred shares are cumulative and non-participating. Dividends have been paid every year except the past two years and the current year.
Assuming that $ 50,000 will be distributed as a dividend in the current year, how much will the common shareholders receive?

A) $ 24,000
B) $ 26,000
C) $ 34,000
D) $ 42,000

Question 77

Use the following information for questions 70-72.
Riga Ltd. has outstanding 100,000 no par common shares and 20,000 no par, $ 0.40, preferred shares issued at $ 5 each. The preferred shares are cumulative and non-participating. Dividends have been paid every year except the past two years and the current year.
The Common Shares account currently shows a balance of $ 200,000. Assuming that $ 61,000 will be distributed as a dividend in the current year, and the preferred shares are also fully participating, how much will the common shareholders receive?

A) $ 37,000
B) $ 30,000
C) $ 31,000
D) $ 16,000

Question 78

Use the following information for questions 70-72.
Riga Ltd. has outstanding 100,000 no par common shares and 20,000 no par, $ 0.40, preferred shares issued at $ 5 each. The preferred shares are cumulative and non-participating. Dividends have been paid every year except the past two years and the current year.
Assuming that $ 21,000 will be distributed as a dividend in the current year, how much will the preferred shareholders receive?

A) $ 0
B) $ 8,000
C) $ 16,000
D) $ 21,000

Question 79

On December 31, 2020, Monaco Ltd. had outstanding 2,000 no par value, $ 6, cumulative preferred shares and 30,000 no par value common shares. At this time, dividends in arrears on the preferred shares were $ 6,000. Cash dividends declared in 2021 totalled $ 30,000. The amounts paid to each class of shares were Preferred Shares Common Shares

Question 80

The December 31, 2020 condensed balance sheet of Bee Services, a proprietorship, follows: On January 1, 2021, Bee Services was incorporated as Bee-Line Ltd., with 10,000 no par value common shares issued. How much should be credited to Common Shares?

A) $ 370,000
B) $ 300,000
C) $ 270,000
D) $ 200,000