Question

Cash dividends and two classes of stock. Googelie Inc. has two classes of capital stock outstanding:...

Cash dividends and two classes of stock. Googelie Inc. has two classes of capital stock outstanding: 45,000 shares of 8%, $100 par value cumulative preferred and 25,000 shares of $10 par value common. The company had a deficit (negative balance in retained earnings) of $230,000 at the beginning of the current year, and preferred dividends were two years in arrears. During the current year, the company earned net income of $1,735,000. What will be the balance in the Retained Earnings account at the end of the current year if the company takes all the actions necessary to pay a dividend of $1.50 per share on the common stock?

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1
Total Preference dividend paid:
Prefered stcok capital 4,500,000
Annual dividend rate 8%
Annual dividend amount 360,000
Arrears for last 2 years
Therefore, Prefered dividend to be paid for 3 years
Total prefered dividend paid 1080000
(360000*3)
Common Dividend paid 37500
(25000 shares @ 1.50 pere share)
Balance in Retained earnings at the end:
Beginning balance in RE -230000
(as having debit balance)
Add: Net income 1735000
1505000
Less: Dividend paid:
Prefered dividend 1,080,000
Cmmon Dividend 37,500
Balance in Retained earnings at end 387,500
Therefore,
Balance in Retained earnings at end : $ 387500 (Credit balance)
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
Question#3: Cash Dividends with Cumulative Preferred Stock       Tucker Exports has the following stock outstanding: 25,000...
Question#3: Cash Dividends with Cumulative Preferred Stock       Tucker Exports has the following stock outstanding: 25,000 shares of $80 par value, 6% cumulative preferred stock 150,000 shares of $2.50 par value, common stock The company declares and pays the following dividends for the past four years: 2017              $ 65,000 2018              $412,000 2019              $303,000 2020              No dividends are paid Compute the total cash dividends paid to each class of stock in 2017 through 2020 using the following table. Arrearage Preferred Common...
Adella Corp. has outstanding 50,000 shares of $1 par value common stock as well as 10,000...
Adella Corp. has outstanding 50,000 shares of $1 par value common stock as well as 10,000 shares of 6%, $100 par value cumulative preferred stock. At the beginning of the year, the balance in retained earnings was $500,000, and one year’s dividends were in arrears. Net income for the current year is $260,000. Compute the balance in retained earnings at the end of the year if Adella Corp. pays a dividend of $2 per share on its commons tock this...
Raphael Corporation’s common stock is currently selling on a stock exchange at $171 per share, and...
Raphael Corporation’s common stock is currently selling on a stock exchange at $171 per share, and its current balance sheet shows the following stockholders’ equity section: Preferred stock—5% cumulative, $___ par value, 1,000 shares authorized, issued, and outstanding $ 85,000 Common stock—$___ par value, 4,000 shares authorized, issued, and outstanding 200,000 Retained earnings 340,000 Total stockholders' equity $ 625,000 1. What is the current market value (price) of this corporation’s common stock? 2. What are the par values of the...
Problem 15-3 Hatch Company has two classes of capital stock outstanding: 7%, $20 par preferred and...
Problem 15-3 Hatch Company has two classes of capital stock outstanding: 7%, $20 par preferred and $5 par common. At December 31, 2014, the following accounts were iHatch Company has two classes of capital stock outstanding: 7%, $20 par preferred and $5 par common. At December 31, 2014, the following accounts were included in stockholders’ equity. Preferred Stock, 151,800 shares $ 3,036,000 Common Stock, 2,120,000 shares 10,600,000 Paid-in Capital in Excess of Par—Preferred Stock 203,700 Paid-in Capital in Excess of...
Mustang Company has the following shares of stock outstanding: Preferred, 8%, $100 par, 10,000 shares (Dividends...
Mustang Company has the following shares of stock outstanding: Preferred, 8%, $100 par, 10,000 shares (Dividends totaling $15,000 are in arrears.) Common, $1 par, 100,000 shares On October 22, the board of directors declared cash dividends totaling $100,000, payable on December 24 to shareholders of record as of November 24. The preferred stock is NONCUMULATIVE. Which of the following will be included in the journal entry to record the declaration of the dividends? Question 1 options: Debit Paid-in capital –...
Required information [The following information applies to the questions displayed below.] Raphael Corporation’s common stock is...
Required information [The following information applies to the questions displayed below.] Raphael Corporation’s common stock is currently selling on a stock exchange at $189 per share, and its current balance sheet shows the following stockholders’ equity section:    Preferred stock—5% cumulative, $___ par value, 1,000 shares authorized, issued, and outstanding $ 65,000 Common stock—$___ par value, 4,000 shares authorized, issued, and outstanding 120,000 Retained earnings 350,000 Total stockholders’ equity $ 535,000 6.1 If two years’ preferred dividends are in arrears...
Required information [The following information applies to the questions displayed below.] Raphael Corporation’s balance sheet shows...
Required information [The following information applies to the questions displayed below.] Raphael Corporation’s balance sheet shows the following stockholders’ equity section. Preferred stock—5% cumulative, $___ par value, 1,000 shares authorized, issued, and outstanding $ 75,000 Common stock—$___ par value, 4,000 shares authorized, issued, and outstanding 200,000 Retained earnings 310,000 Total stockholders' equity $ 585,000 1. What are the par values of the corporation’s preferred stock and its common stock? 2. If no dividends are in arrears at the current date,...
Problem 4 The Mark Company has $250,000 to pay dividends. The company has 25,000 shares of...
Problem 4 The Mark Company has $250,000 to pay dividends. The company has 25,000 shares of 8%, $50 par, preferred stock and 100,000 shares of $5 par common stock outstanding. The common stock is currently selling for $43 per share and the preferred stock is selling for $95 per share on the stock market. ​ Determine the amount of dividends to be paid for each class of stock in each of the independent situations. ​ 1) Preferred stock is nonparticipating...
Exercise 11-16 Book value per share LO A4 The equity section of Cyril Corporation’s balance sheet...
Exercise 11-16 Book value per share LO A4 The equity section of Cyril Corporation’s balance sheet shows the following: Preferred stock—5% cumulative, $20 par value, 10,000 shares issued and outstanding $ 200,000 Common stock—$10 par value, 45,000 shares issued and outstanding 450,000 Retained earnings 267,500 Total stockholders’ equity $ 917,500 This year's dividends on preferred stock have been paid. Determine the book value per share of common stock under two separate situations. 1. No preferred dividends are in arrears. 2....
Pearl Company has two classes of capital stock outstanding: 7%, $20 par preferred and $5 par...
Pearl Company has two classes of capital stock outstanding: 7%, $20 par preferred and $5 par common. At December 31, 2020, the following accounts were included in stockholders’ equity. Preferred Stock, 146,100 shares $ 2,922,000 Common Stock, 1,982,000 shares 9,910,000 Paid-in Capital in Excess of Par—Preferred Stock 199,000 Paid-in Capital in Excess of Par—Common Stock 26,630,000 Retained Earnings 4,454,000 The following transactions affected stockholders’ equity during 2021. Jan. 1 30,100 shares of preferred stock issued at $23 per share. Feb....
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT