Question

On January 1, 2020, Samsung Corporation has 400,000 shares of $3 par value common stock outstanding. On the same date the corporation’s board of directors declares a 12% stock dividend to be issue on March 2, 2020. On the declaration date, the corporation’s common stock fair market value is $4. On declaration date, the corporation will record: *

Debit Stock Dividend $144,000

Debit Stock Dividend $192,000

Credit Stock Dividend $144,000

Credit Stock Dividend $192,000

A Company has 30,000 shares of $1 par common stock issued and outstanding. The company also has 5,000 shares of $100 par 5% cumulative preferred stock outstanding. The company did not pay the preferred dividends in 2017 and 2018. On December 1, 2019, the company’s board of directors declared that $200,000 will be paid as dividend on January 17, 2020. What amount of dividends would common stockholders earn? *

$200,000

$150,000

$125,000

$100,000

On November 1, 2019, Lan Inc. announces a 2:1 stock split on its 120,000 shares of $4 par value common stock outstanding. The memo announcing the split will include information about the number of outstanding shares which will be: *

480,000 shares

240,000 shares

120,000 shares

60,000 shares

A small stock dividend is defined as *

less than 30% but greater than 25% of the corporation's issued stock

less than 20–25% of the corporation's issued stock

between 50% and 100% of the corporation's issued stock

more than 30% of the corporation's issued stock

The maturity date of a 4-month interest bearing note dated February 1, 2020 is *

April 1, 2020

May 1, 2020

June 1, 2020

July 1, 2020

On the dividend declaration date *

A dividend becomes a current obligation

No entry is required

An entry may be required if it is a stock dividend

Dividends Payable is debited

A Company has 30,000 shares of $1 par common stock issued and outstanding. The company also has 5,000 shares of $100 par 5% cumulative preferred stock outstanding. The company did not pay the preferred dividends in 2017 and 2018. On December 1, 2019, the company’s board of directors declared that $200,000 will be paid as dividend on January 17, 2020. What amount of dividends must the company pay the preferred shareholders? *

$100,000

$75,000

$50,000

$25,000

William Company is incorporated on January 1, 2018. During its first year, the corporation issued 20,000 shares of $10 par value preferred stock and 300,000 shares of $1 par value common. At December 31, 2018, the company declared $50,000 cash dividend to be paid on January 13, 2019. The record on payment date will include: *

Debit Cash Dividend

Credit Cash Dividend

Debit Dividend Payable

Credit Dividend Payable

Answer 1

1.
Stock Dividend = 400000 x 12% x $4 = $192000
Answer is b. Debit Stock Dividend $192,000

2.
Preferred Dividend = $500000 x 5% x 3 = $75000
Common Dividend = $200000 - 75000 = $125000
Answer is c. $125,000

3.
Answer is c. 240,000 shares
i.e. 120000 x 2

4.
Answer is b. less than 20–25% of the corporation's issued stock

5.
Answer is b. May 1, 2020

6.
Answer is a. A dividend becomes a current obligation

7.
Preferred Dividend = $500000 x 5% x 3 = $75000
Answer is b. $75,000

8.
Answer is a. Debit Dividend Payable