Question 1

Angelique's Antiques declared and paid cash dividends of $25,000.There were 1,000 shares of 10%,$30 par value,noncumulative preferred stock outstanding.How much of the cash dividends were paid to PREFERRED shareholders?

Accepted Answer

The question specifies that only preferred stock was outstanding, so all of the dividends were paid to preferred shareholders. The calculation of how much they received is: 
1,000 shares x $30 par value x 10% annual dividend = $3,000 in total dividends paid to preferred shareholders.

Question 2

The declaration date is the date ________.

Accepted Answer

The declaration date is the date on which the board of directors of a corporation announces that a dividend will be paid. This announcement includes the amount of the dividend and the date of record. It is important for investors to pay attention to the declaration date as it signals the company's commitment to providing returns to its shareholders.

Question 3

A difference between preferred stock and common stock is preferred shareholders ________.

Accepted Answer

Preferred shareholders must receive their dividends before any of the common shareholders are paid. Option A is incorrect as preferred shareholders typically do not have voting rights. Option B is incorrect as both preferred and common shareholders have the right to share in any assets left if the company goes out of business after the creditors have been paid. Option C is incorrect as this refers to preemptive rights, which may or may not be granted to preferred shareholders.

Question 4

Marcy's Catering has been so successful that the business needs to expand its facility.Marcy has decided to change the business from a sole proprietorship to a corporation in order to raise more money from the sale of stock to investors.Marcy's accountant has prepared a proposed shareholders' equity section of the balance sheet.Explain to Marcy what each line item represents.

Accepted Answer

The answer of Marcy's Catering has been so successful that...

Question 5

Mufti Company issued 1,500 shares of its $1 par value common stock.The market price on the day of sale was $15 per share.Describe the effect of this transaction on each of the following items:
1.Cash
2.Total paid-in capital
3.Capital stock
4.Additional paid-in capital

Accepted Answer

The answer of Mufti Company issued 1,500 shares of its...

Question 6

What is preferred stock?

Accepted Answer

The answer of What is preferred stock?...

Question 7

The date of record is the date ________.

Accepted Answer

The date of record is used to determine exactly who will receive dividends. This means that shareholders who are on record as owning shares on the date of record will be eligible to receive the dividend, regardless of whether they sell their shares before the dividend is paid. The other options (A, C, and D) relate to other important dates in the dividend payment process but are not the date of record.

Question 8

Dividends ________.

Accepted Answer

Dividends result in a decrease in retained earnings, which is a component of shareholders' equity, because they represent a distribution of earnings to shareholders. They are not considered expenses in accounting; rather, they are distributions of profit.

Question 9

Vest,Inc.received cash from selling 100 shares of its $1 par value common stock at $10 per share.Show the effect of issuing stock on the accounting equation,including both account titles and amounts.

Accepted Answer

The answer of Vest,Inc.received cash from selling 100 shares of...

Question 10

The date of payment is the date ________.

Accepted Answer

The date of payment is the actual date on which the shareholders receive cash payments for the declared dividends.

Question 11

Distributions of a corporation's earnings to its shareholders are called ________.

Accepted Answer

Distributions of a corporation's earnings to its shareholders are called dividends. Paid-in capital refers to the amount of capital contributed by shareholders, retained earnings are the portion of a corporation's profits that are not distributed as dividends but are kept in the corporation as reserves, and distribution expense refers to the costs associated with distributing a product or service.

Question 12

Team Shirts reported total shareholders' equity of $80,000 on its October 31 balance sheet.During November,the business earned $270,000,and declared and paid a cash dividend of $20,000.What was total shareholders' equity on November 30?

Accepted Answer

Total shareholders' equity on November 30 can be calculated as follows:
October 31 equity + earnings in November - cash dividend declared and paid = 
$80,000 + $270,000 - $20,000 = $330,000. 
Therefore, the correct answer is D ($330,000).

Question 13

Noncumulative preferred stock means that ________.

Accepted Answer

Noncumulative preferred stock does not accumulate unpaid dividends from year to year. If the board of directors does not declare a dividend in a given year, shareholders of noncumulative preferred stock do not have the right to claim those missed dividends in the future. This contrasts with cumulative preferred stock, where missed dividends accumulate and must be paid out before dividends can be distributed to common shareholders.

Question 14

G-Hi Corporation's state charter authorizes the corporation to issue 1,000,000 shares of $1 par value common stock.It has sold 600,000 shares of common stock to the public.At the end of the year it held 20,000 shares of treasury stock.
1.How many shares are authorized?
2.How many shares are issued?
3.How many shares are outstanding?

Accepted Answer

The answer of G-Hi Corporation's state charter authorizes the corporation...

Question 15

Cumulative preferred stock means that ________.

Accepted Answer

Cumulative preferred stock means that any unpaid dividends accumulate from year to year and must be paid out to the preferred shareholders before any dividends can be paid to common shareholders. This is different from non-cumulative preferred stock, where any unpaid dividends do not accumulate and are simply forgone by the shareholders.

Question 16

The date on which the board of directors of a corporation decides that earnings are sufficient to pay a dividend is the ________.

Accepted Answer

The declaration date is the date on which the board of directors decides that earnings are sufficient to pay a dividend. The date of record is the date on which a shareholder must be on record to receive a dividend, and the date of payment is the actual date on which the dividend is paid out. The dividend date is not a commonly used term in finance.

Question 17

Dividends ________.

Accepted Answer

Dividends are the distribution of profits to shareholders. They are not expenses and do not cause shareholders' equity or common stock to decrease. However, they do cause retained earnings to decrease, as they are a distribution of profits that are no longer being retained by the company.

Question 18

Out of Africa had the following shareholders' equity section on its balance sheet as of
December 31.
  Calculate the following:
a.Number of shares of preferred stock outstanding
b.Number of shares of common stock outstanding

Accepted Answer

The answer of Out of Africa had the following shareholders'...

Question 19

A company has 2,000 shares of $100 par,6%,noncumulative preferred stock outstanding.If the board of directors declares a dividend this year,how much will the preferred shareholders receive?

Accepted Answer

The preferred shareholders will receive a 6% dividend on the $100 par value, which equals $6 per share.

Question 20

Which of these comes first?

Accepted Answer

The declaration date is the first step in the dividend payment process, where the company's board of directors declares the dividend and announces the amount and payment date. The date of record is the date when shareholders must be on the company's books to receive the declared dividend. The payment date is the date when the dividend is actually paid to shareholders. The liquidation date is not a term typically used in the context of dividend payments.

Quiz 8: Accounting for Shareholders Equity

Angelique's Antiques declared and paid cash dividends of $25,000.There were 1,000 shares of 10%,$30 par value,noncumulative preferred stock outstanding.How much of the cash dividends were paid to PREFERRED shareholders?

The declaration date is the date ________.

A difference between preferred stock and common stock is preferred shareholders ________.

Mufti Company issued 1,500 shares of its $1 par value common stock.The market price on the day of sale was $15 per share.Describe the effect of this transaction on each of the following items: 1.Cash 2.Total paid-in capital 3.Capital stock 4.Additional paid-in capital

What is preferred stock?

The date of record is the date ________.

Dividends ________.

Vest,Inc.received cash from selling 100 shares of its $1 par value common stock at $10 per share.Show the effect of issuing stock on the accounting equation,including both account titles and amounts.

The date of payment is the date ________.

Distributions of a corporation's earnings to its shareholders are called ________.

Team Shirts reported total shareholders' equity of $80,000 on its October 31 balance sheet.During November,the business earned $270,000,and declared and paid a cash dividend of $20,000.What was total shareholders' equity on November 30?

Noncumulative preferred stock means that ________.

Cumulative preferred stock means that ________.

The date on which the board of directors of a corporation decides that earnings are sufficient to pay a dividend is the ________.

Dividends ________.

Out of Africa had the following shareholders' equity section on its balance sheet as of December 31. Calculate the following: a.Number of shares of preferred stock outstanding b.Number of shares of common stock outstanding

A company has 2,000 shares of $100 par,6%,noncumulative preferred stock outstanding.If the board of directors declares a dividend this year,how much will the preferred shareholders receive?

Which of these comes first?