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Randall Company declared a $0.50 per share cash dividend on its common shares. The company has...

Randall Company declared a $0.50 per share cash dividend on its common shares. The company has 20,000 shares authorized, 9,000 shares issued, and 8,000 shares of common stock outstanding.  What is the total amount of dividend that will be paid?

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Answer #1

Amswer:

Total amount of dividend that will be paid = Rate of dividend * number of shares outstanding

= $0.50 * 8000

= $ 4000

EXPLANATION:

Dividends are paid only on outstanding shares of common stock.

Authorized shares capital means maximum amount of share capital that the company is authorised by its constitutional documents to issue to shareholders.

Issued shares capital means number of shares issued by the company to its shareholders.

The number of outstanding shares= shares issued - number of shares purchased by the company itself

Shares bought by the issuing company itself called treasury stock.

Holder of theses shares not entitle to receive dividend .

If dividend is paid to such shareholders means company would be paying cash to itself and this is meaningless act

THANK YOU !

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