Question

1.Vision Corporation has the following information on its financial statement:

Preferred Stock 6%, $100 par, cumulative, 10,000 shares authorized	$	450,000
Common stock, $3 par, 500,000 shares authorized, 240,000 issued		720,000
Paid-in capital - Preferred		750,000
Paid-in capital - Common		3,000,000
Retained earnings		1,192,500

If Vision paid a total of $55,800 in dividends, how much would each common stockholder receive for each share of stock owned? (Assume there are no dividends in arrears.)

Multiple Choice

$0.18 per share

$0.24 per share

$0.06 per share

$0.12 per share

2. Capital expenditures are recorded as:

Multiple Choice

An asset.

An expense.

Income.

A liability.

Answer 1

Ans:

1.

Total dividends paid	$55,800
Less: Preference dividends($450,000*6%)	($27,000)
Dividends available to common stock holders	$28,800

Number of common shares = 240,000 shares.

Dividend for common stockholder's = $28,800/240,000 = 0.12 per share

Money to be received by each common stockholder's for each share = 0.12 per share.

Hence, the correct answer is Option "4".

2.

The correct answer option "1".

Capital expenditures are recorded as an asset, rather than charging it immediately to expense. The fixed asset is then charged to expense over the useful life of the asset using the depreciation on the asset. Capital expenditures are recorded in the balance sheet.

Thank you,