Hazelnut Corporation had 40,000 shares of $4 par value common stock outstanding on January 1.On January 20,the company purchased 4,000 of its stock for $16 per share.On July 3,the company reissued 2,000 of the shares at $20 per share.Hazelnut uses the cost method to account for its treasury stock.Assume the company paid a dividend of $5 per share on August 3.What is the total amount of the dividends that would be paid to the common stockholders?
A)$190,000
B)$200,000
C)$180,000
D)$152,000

Question

Quizplus · Accepted Answer

Dividends are paid only on outstanding shares.There are 38,000 shares outstanding on August 3 (40,000 − 4,000 + 2,000),so the amount of dividends paid equals $190,000 (or $5 per share × 38,000 outstanding shares).

Hazelnut Corporation Had 40,000 Shares of $4 Par Value Common