Houston Lives in our Hearts Forever Corporation was organized on January 1, 2011
ID: 2446911 • Letter: H
Question
Houston Lives in our Hearts Forever Corporation was organized on January 1, 2011. During its first year, the corporation issued 40,000 shares of $5 par value preferred stock and 400,000 shares of $1 par value common stock. At December 31, the company declared the following cash dividends: 2011 : $8,000 2012: $30,000 2013 $ 70,000 Instructions
a) Show the allocation of dividends to each class of stock, assuming the preferred stock dividend is 5% and not cumulative.
(b) Show the allocation of dividends to each class of stock, assuming the preferred stock dividend is 5% and cumulative.
(c) Journalize the declaration of the cash dividend at December 31, 2013 using the assumption of part (b)
Explanation / Answer
Details No of shares issued Par value Total Share value Yearly dividend % Yearly dividend amount Common Stock 400,000 $ 1.00 400,000 Preference stock 40,000 $ 5.00 200,000 5% 10,000 Non Cumulative Year Dividend paid Preference dividend Common dividednd 2011 8,000 8,000 - 2012 30,000 10,000 20,000 2013 70,000 10,000 60,000 Cumulative Year Dividend paid Preference dividend Common dividednd Arrear 2011 8,000 8,000 - 2,000 2012 30,000 10,000 Arrear 2,000 8,000 2013 70,000 10,000 60,000 JV for Dividend declaration on 31.12.13 Account Dr $ Cr $ Retained Earning 70,000 Preference Dividend payable 10,000 Common Stock Dividend Payable 60,000
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.