Problem 1 Cool Beans Company has 30,000 shares of 2% cumulative preferred stock

Question

Problem 1

Cool Beans Company has 30,000 shares of 2% cumulative preferred stock of $50 par and 50,000 shares of $50 par common stock. Below are the amounts distributed as dividends.

$20,000

$50,000

$90,000 Please determine the amount of dividends paid to common and preferred stock for each scenario presented above.

Problem 2

On April, 10 2010, Cougs Company issued for cash 20,000 shares of no-par common stock for $40. On April 15, Cougs issued at par 2000 shares of 5%, $50 par preferred stock for cash. On May 1, Cougs Company issued for cash 2,000 shares of 5%, $50 par preferred stock for $55.

Journalize the entries to record the April 10, April 15 and May 1 transactions

Problem 3

You have noted that there are 3 important dates associated with a cash dividend of $25,000. These are May 1, May 15 and May 30. Please journalize the preceding transactions.

Explanation / Answer

Problem 1

Preferrence Share value = 30000*50 = $1500000; 2% dividend = $30000

Scenario 1 $20000 - entire dividend paid to Preferrence share holder, balance in $10000

Scenario 2 $50000 - $30000 paid Preferrence share holder and balance of $10000 from previous, balance $10000 to equity share holder

Scenario 3 $30000 to preferrence shareholder and balance $60000 to equity stock holder

Problem 2

Date Particulars Debit Credit April 10 Cash 800000 Equity Shares 800000 April 15 Cash 100000 Preferrence Shares 100000 May 1 Cash 110000 Preferrence Shares 100000 Premium on Preferrence Shares 10000

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