Question 1

Dividends decrease net income.

Accepted Answer

Dividends do not affect the net income; they are a distribution of earnings to shareholders and are deducted from retained earnings.

Question 2

Team Shirts declared and paid cash dividends of $40,000.There were 1,000 shares of 6%,$10 par value,noncumulative preferred stock outstanding.How much of the cash dividends were paid to PREFERRED  shareholders?

Accepted Answer

The answer of Team Shirts declared and paid cash dividends...

Question 3

Dividends are an operating expense of a corporation.

Accepted Answer

Dividends are not an operating expense of a corporation. They are a distribution of profits to shareholders after all operating expenses and taxes have been paid. Operating expenses refer to the costs incurred in carrying out the day-to-day activities of a business.

Question 4

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 COMMON  shareholders?

Accepted Answer

The preferred stockholders are entitled to receive their dividend payment first before any payment can be made to common stockholders. Since the preferred stock is noncumulative, any past unpaid dividends on the preferred stock do not need to be paid. Therefore, the entire $25,000 dividend payment is allocated to the 1,000 shares of preferred stock, yielding a dividend payment of $25 per share ($30 par value x 10% annual dividend rate). None of the dividend payment goes to common shareholders.

Question 5

On July 1,the board of directors of Team Shirts declared a $0.75 cash dividend per share for shareholders owning company stock on July 10.The checks will be issued on July 15.What are the dates of declaration,record,and payment?

Accepted Answer

The answer of On July 1,the board of directors of...

Question 6

On July 31,Ace Electronics paid a cash dividend of $0.50 per share to common shareholders.There were 80,000 shares issued at the time.Ace held 5,000 shares of treasury stock.Ace also paid a dividend to preferred shareholders.There were 1,000 shares of 6%,$100 par preferred stock outstanding.What was the total dollar amount of the cash dividend?

Accepted Answer

The answer of On July 31,Ace Electronics paid a cash...

Question 7

Dividends decrease contributed capital.

Accepted Answer

Dividends do not decrease contributed capital. Contributed capital represents the amount of funds received by a company from shareholders in exchange for ownership interest in the company. Dividends are distributions of a company's profits to its shareholders and do not affect the contributed capital balance.

Question 8

Out of Africa,a multi-national corporation had a very successful year.The board of directors declared and paid a cash dividend of $50,000.The prior year,Out of Africa did not pay dividends on its 400 shares of cumulative,8%,$100 par,preferred stock.How much of the cash dividend was paid to the COMMON shareholders?

Accepted Answer

First, we need to calculate the amount of dividends that must be paid to the preferred shareholders. The preferred shares are cumulative, meaning that any missed dividends must be paid before any dividends can be paid to the common shareholders.

The preferred dividend amount can be calculated as follows: 
Preferred dividend amount = (400 shares) x ($100 par value per share) x (8% dividend rate) = $32,000

Since the company did not pay any dividends on the preferred shares in the prior year, it must pay these accumulated dividends first.

After paying the preferred dividend of $32,000, there is only $18,000 left for the common shareholders.

Therefore, the amount of the cash dividend paid to the common shareholders is $18,000 or ($50,000 - $32,000) which is answer choice D.

Question 9

Preferred stock has preference over common stock when dividends are paid.

Accepted Answer

Preferred stock is designed to have preference over common stock when it comes to receiving dividends. Preferred shareholders have a right to receive a fixed dividend amount before any dividends can be distributed to common shareholders.

Question 10

On June 15,Team Shirts paid a cash dividend of $0.75 per share to common shareholders.There were 45,000 shares issued at the time.Team Shirts held 1,000 shares of treasury stock.Team Shirts also paid a dividend to preferred shareholders.There were 200 shares of 8%,$100 par preferred stock outstanding.What was the total dollar amount of the cash dividend?

Accepted Answer

The answer of On June 15,Team Shirts paid a cash...

Question 11

Dividends are distributions of a corporation's earnings to its shareholders.

Accepted Answer

Dividends are indeed distributions of a corporation's earnings to its shareholders, typically paid out in the form of cash or additional shares of stock.

Question 12

What are dividends?

Accepted Answer

The answer of What are dividends?...

Question 13

Team Shirts had an exceptional second quarter and earned net income of $250,000.On August 1,the board of directors of Team Shirts declared a $1.00 per share cash dividend to be paid on August 15 to shareholders owning company stock on August 10.What are the dates of declaration,record,and payment?

Accepted Answer

The answer of Team Shirts had an exceptional second quarter...

Question 14

Trading Places,a multi-national corporation,had a very successful year.The board of directors declared and paid a cash dividend of $50,000.The prior year,Trading Places did not pay dividends on its 400 shares of noncumulative,8%,$100 par,preferred stock.How much of the cash dividend was paid to the PREFERRED shareholders?

Accepted Answer

The preferred shareholders receive 8% of the $100 par value per share, which is $8 per share. With 400 shares, the total dividend for preferred shareholders is 400 shares * $8 = $3,200. Since the preferred stock is noncumulative, they do not receive any dividends for the prior year.

Question 15

Team Shirts declared and paid cash dividends of $40,000.There were 1,000 shares of 6%,$10 par value,noncumulative preferred stock outstanding.How much of the cash dividends were paid to COMMON  shareholders?

Accepted Answer

First, we need to calculate the preferred dividends:

Preferred dividends = (Preferred stock outstanding) x (Par value per share) x (Dividend rate)
= 1,000 x $10 x 6% = $6000

After paying the preferred dividends, we can calculate how much cash is left for the common shareholders:

Cash dividends for common shareholders = Total dividends paid - Preferred dividends
= $40,000 - $6,000 = $34,000

Since there is no information on the number of common shares outstanding, we cannot calculate the amount of cash dividends per share. Therefore, the answer is B) $39,400, which is the amount of cash dividend paid to BOTH preferred and common shareholders combined.

Question 16

Dividends decrease retained earnings.

Accepted Answer

Dividends are a distribution of a company's profits to its shareholders. As a result, when dividends are paid, the company's retained earnings decrease. Retained earnings are the portion of a company's profits that are kept within the company for future use, such as reinvesting in the business or paying off debt.

Question 17

On March 15,Team Shirts paid a cash dividend of $0.25 per share to its shareholders.There were 65,000 shares issued at the time.Team Shirts held 2,500 shares of treasury stock.What was the total dollar amount of the cash dividend?

Accepted Answer

The answer of On March 15,Team Shirts paid a cash...

Question 18

Common stock has preference over preferred stock when dividends are paid.

Accepted Answer

Preferred stock has preference over common stock when dividends are paid.

Question 19

Trading Places,a multi-national corporation,had a very successful year.The board of directors declared and paid a cash dividend of $50,000.The prior year,Trading Places did not pay dividends on its 400 shares of noncumulative,8%,$100 par,preferred stock.How much of the cash dividend was paid to the COMMON shareholders?

Accepted Answer

The preferred stock dividends are calculated as 400 shares * 8% * $100 par = $3,200. Since the dividends are noncumulative and were not paid the prior year, only the current year's dividend is relevant. After paying the preferred dividends, the remaining amount for common shareholders is $50,000 - $3,200 = $46,800.

Question 20

Out of Africa,a multi-national corporation had a very successful year.The board of directors declared and paid a cash dividend of $50,000.The prior year,Out of Africa did not pay dividends on its 400 shares of cumulative,8%,$100 par,preferred stock.How much of the cash dividend was paid to the PREFERRED shareholders?

Accepted Answer

The preferred shareholders are entitled to a cumulative dividend, which means that any unpaid dividends from previous years must be paid before any dividends can be paid to common shareholders. In this case, the preferred shareholders are entitled to $3,200 in unpaid dividends from the prior year (400 shares x $8 dividend per share). Therefore, the total amount of the cash dividend that was paid to the preferred shareholders is $6,400 ($3,200 + $50,000).

Quiz 8: Accounting for Shareholders Equity

Dividends decrease net income.

Team Shirts declared and paid cash dividends of $40,000.There were 1,000 shares of 6%,$10 par value,noncumulative preferred stock outstanding.How much of the cash dividends were paid to PREFERRED shareholders?

Dividends are an operating expense of a corporation.

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 COMMON shareholders?

On July 1,the board of directors of Team Shirts declared a $0.75 cash dividend per share for shareholders owning company stock on July 10.The checks will be issued on July 15.What are the dates of declaration,record,and payment?

Dividends decrease contributed capital.

Preferred stock has preference over common stock when dividends are paid.

Dividends are distributions of a corporation's earnings to its shareholders.

What are dividends?

Team Shirts had an exceptional second quarter and earned net income of $250,000.On August 1,the board of directors of Team Shirts declared a $1.00 per share cash dividend to be paid on August 15 to shareholders owning company stock on August 10.What are the dates of declaration,record,and payment?

Team Shirts declared and paid cash dividends of $40,000.There were 1,000 shares of 6%,$10 par value,noncumulative preferred stock outstanding.How much of the cash dividends were paid to COMMON shareholders?

Dividends decrease retained earnings.

On March 15,Team Shirts paid a cash dividend of $0.25 per share to its shareholders.There were 65,000 shares issued at the time.Team Shirts held 2,500 shares of treasury stock.What was the total dollar amount of the cash dividend?

Common stock has preference over preferred stock when dividends are paid.