Question

The books of Ivanhoe Corporation carried the following account balances as of December 31, 2020. Cash...

The books of Ivanhoe Corporation carried the following account balances as of December 31, 2020.

Cash $ 191,000
Preferred Stock (6% cumulative, nonparticipating, $50 par) 292,000
Common Stock (no-par value, 324,000 shares issued) 1,620,000
Paid-in Capital in Excess of Par—Preferred Stock 135,000
Treasury Stock (common 2,700 shares at cost) 36,100
Retained Earnings 98,900


The company decided not to pay any dividends in 2020.

The board of directors, at their annual meeting on December 21, 2021, declared the following: “The current year dividends shall be 6% on the preferred and $0.50 per share on the common. The dividends in arrears shall be paid by issuing 1,460 shares of treasury stock.” At the date of declaration, the preferred is selling at $80 per share, and the common at $12 per share. Net income for 2021 is estimated at $75,900.

(a) Prepare the journal entries required for the dividend declaration and payment, assuming that they occur simultaneously. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Round answers to 0 decimal places, e.g. 3,487.)

Account Titles and Explanation

Debit

Credit

For preferred dividends in arrears:

For preferred current year dividend:

For common share dividend:


(b) Could Ivanhoe Corporation give the preferred stockholders 2 years’ dividends and common stockholders a 50 cents per share dividend, all in cash?

NoYes

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

a.

Account Titles and Explanation Debit Credit
For preferred dividends in arrears:
Retained earnings 17520
Treasury stock 17520
For preferred current year dividends:
Retained earnings 17520
Cash 17520
For common share dividend:
Retained earnings 96828
Cash 96828

Working:

Preferred dividend in arrears = 6% * $292,000 = $17,520

Current year preferred dividend = 6% * $292,000 = $17,520

Common dividend = $0.50 * (324,000 - 2,700 + 1460) = $0.30 * 322,760 = $96,828

b. Yes

Total dividend payable = 17520 + 17520 + 96828 = 131868

Available cash balance = 191000

Since available cash balance is more, the dividend can be paid in cash

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
The books of Skysong Corporation carried the following account balances as of December 31, 2020. Cash...
The books of Skysong Corporation carried the following account balances as of December 31, 2020. Cash $ 182,000 Preferred Stock (6% cumulative, nonparticipating, $50 par) 272,000 Common Stock (no-par value, 318,000 shares issued) 1,590,000 Paid-in Capital in Excess of Par—Preferred Stock 160,000 Treasury Stock (common 2,600 shares at cost) 30,800 Retained Earnings 110,600 The company decided not to pay any dividends in 2020. The board of directors, at their annual meeting on December 21, 2021, declared the following: “The current...
The books of Headland Corporation carried the following account balances as of December 31, 2020. Cash...
The books of Headland Corporation carried the following account balances as of December 31, 2020. Cash $ 190,000 Preferred Stock (6% cumulative, nonparticipating, $50 par) 316,000 Common Stock (no-par value, 284,000 shares issued) 1,420,000 Paid-in Capital in Excess of Par—Preferred Stock 140,000 Treasury Stock (common 2,700 shares at cost) 31,700 Retained Earnings 99,500 The company decided not to pay any dividends in 2020. The board of directors, at their annual meeting on December 21, 2021, declared the following: “The current...
Swifty Company reported the following amounts in the stockholders’ equity section of its December 31, 2019,...
Swifty Company reported the following amounts in the stockholders’ equity section of its December 31, 2019, balance sheet. Preferred stock, 10%, $100 par (10,000 shares authorized, 1,800 shares issued) $180,000 Common stock, $5 par (93,000 shares authorized, 18,600 shares issued) 93,000 Additional paid-in capital 130,000 Retained earnings 467,000    Total $870,000 During 2020, Swifty took part in the following transactions concerning stockholders’ equity. 1. Paid the annual 2019 $10 per share dividend on preferred stock and a $2 per share dividend...
At January 1, 2020, Cullumber Company’s outstanding shares included the following. 290,000 shares of $50 par...
At January 1, 2020, Cullumber Company’s outstanding shares included the following. 290,000 shares of $50 par value, 7% cumulative preferred stock 969,000 shares of $1 par value common stock Net income for 2020 was $2,564,000. No cash dividends were declared or paid during 2020. On February 15, 2021, however, all preferred dividends in arrears were paid, together with a 5% stock dividend on common shares. There were no dividends in arrears prior to 2020. On April 1, 2020, 479,000 shares...
At January 1, 2020, Skysong Company’s outstanding shares included the following. 276,000 shares of $50 par...
At January 1, 2020, Skysong Company’s outstanding shares included the following. 276,000 shares of $50 par value, 6% cumulative preferred stock 940,000 shares of $1 par value common stock Net income for 2020 was $2,512,000. No cash dividends were declared or paid during 2020. On February 15, 2021, however, all preferred dividends in arrears were paid, together with a 5% stock dividend on common shares. There were no dividends in arrears prior to 2020. On April 1, 2020, 408,000 shares...
The stockholders' equity section of Mia Corporation at December 31, 2021, included the following: 6% preferred...
The stockholders' equity section of Mia Corporation at December 31, 2021, included the following: 6% preferred stock, $120 par value, cumulative, 10,000 shares authorized, 8,000 shares issued and outstanding $ 960,000 Common stock, $10 par value, 300,000 shares authorized, 200,000 shares issued and outstanding 32,000,000 Dividends were not declared on the preferred stock in 2019 and are in arrears. On September 15, 2020, the board of directors of Mia Corporation declared $50,000 cash dividends to stockholders of record on October...
The records of Hoffman Company reflected the following balances in the stockholders’ equity accounts at December...
The records of Hoffman Company reflected the following balances in the stockholders’ equity accounts at December 31, 2015:   Common stock, par $12 per share, 40,500 shares outstanding.   Preferred stock, 8 percent, par $11 per share, 6,010 shares outstanding.   Retained earnings, $221,000. On January 1, 2016, the board of directors was considering the distribution of a $62,100 cash dividend. No dividends were paid during 2014 and 2015. Required: 1. Determine the total and per-share amounts that would be paid to the...
The shareholders equity section of Yessir corporation at December 31, 2020 included the following: $6 preferred...
The shareholders equity section of Yessir corporation at December 31, 2020 included the following: $6 preferred shares cumulative, 10,000 shares authorized 8,000 shares issued            $800,000 Common shares, 250,000 shares authorized, 200,000 shares issued                                  $2,000,000 Dividends were not declared on the preferred shares in 2020 and are in arrears. On September 15, 2021, the board of directors of yessir corporation declared on the preferred shares for 2020 and 2021, to shareholders of record on October 1, 2021, payable on October 15,2021...
Ayayai Corporation has 8,200 shares of $100 par value, 8%, preferred stock and 47,000 shares of...
Ayayai Corporation has 8,200 shares of $100 par value, 8%, preferred stock and 47,000 shares of $10 par value common stock outstanding at December 31, 2020. Answer the questions in each of the following independent situations. (a) If the preferred stock is cumulative and dividends were last paid on the preferred stock on December 31, 2017, what are the dividends in arrears on December 31, 2020, balance sheet? The amount of dividends in arrears on the December 31, 2020 $...
1 ridgeport Corporation has 8,200 shares of $100 par value, 8%, preferred stock and 47,000 shares...
1 ridgeport Corporation has 8,200 shares of $100 par value, 8%, preferred stock and 47,000 shares of $10 par value common stock outstanding at December 31, 2020. Answer the questions in each of the following independent situations. (a) If the preferred stock is cumulative and dividends were last paid on the preferred stock on December 31, 2017, what are the dividends in arrears on December 31, 2020, balance sheet? The amount of dividends in arrears on the December 31, 2020...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT