Just need to get answers and to work the problem. Thank you


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Just need to get answers and to work the problem. Thank you coursehero! ch 11 lesson 2.docx Chapter 11: Lesson 2 Reviewing Cash Dividends: Some Company has 10,000 shares of 2% cumulative preferred stock with a par value of $50 and 25,000 shares of $100 par common stock. The following amounts were distributed as dividends: Year 1 $18,000, Year 2 $7,500, Year 3 $35,000. Determine the total dividends allocated to preferred and common stock for each year and determine the dividends per share for preferred and common for each year. Step 1: Find the key numbers that you need. Preferred Stock: Par $_____ Dividend Rate _____% Common Stock: Par $_____ (there is no set dividend rate) Number of shares outstanding____________ Number of shares outstanding____________ Step 2: Calculate the amount of dividends that preferred shareholders have a right to each year. __________ X _________ = $_______ per share $_______ X _______________ = $______________ total for PS Step 3: Allocate the dividends distributed to preferred and common The preferred stock is cumulative, therefore, if the PS does not get the total they “want,” they will remember the amount of dividends they are still owed (the amount “in arrears”). Year 1 2 3 Total dividends distributed $ $ $ Total amount for PS Amount still owed to PS PS dividends per share Total amount for CS CS dividends per share Issuing Stock: A corporation keeps separate capital accounts for each class of stock. In most states, a corporation must record _________ value in the stock accounts. When the shareholder pays ____________ than par value for the stock, the excess in recorded as Paid in Capital ____ ______________ _____ ________. For example, this is how you record issuing 1000 shares of $5 par common stock for $7 per share: ($7 is the market value) If the corporation issues preferred stock instead of common, you just change the name of the stock. For example: Stated Value Stock: If a corporation has no-par stock with a stated value, the entries are the same as above EXCEPT you replace the word ____________ with the words _________________ __________________. Important dates for Dividends: In the last class, we learned the 3 important dates related to a dividend: Date of _________________________: the date the Board of Directors votes to approve the dividend. Date of _________________________: the date the corporation uses to determine who gets the dividends. Date of _________________________: the date the corporation mails the checks or deposits the dividends. Recording Dividends: The corporation is required to make journal entries on the date of declaration and the date of payment. There is no entry on the date of record. For example: On Dec. 1, a corporation declares $100,000 in dividends to common shareholders with a date of record of Dec. 15. that is payable on Dec. 31. Which date is the “Date of Declaration”? ________________________ Which date is the “Date of Record”? __________________________ (there is no entry on this date) Which date is the “Date of Payment”? _____________________________ Stock Dividends: Stock ____________________ are different from __________________ dividends. When a corporation issues a _______________________ dividend, they send shares of stock to existing shareholders instead of cash. For example: A company has 10,000 outstanding shares of $1 par common stock. The Board declares a 10% stock dividend when the market value of the stock is $3 per share. Step 1: Calculate the number of “new” shares the company will distribute __________________ Step 2: Calculate the par value of these “new” shares ___________________ Step 3: Calculate the market value of these “new” shares_________________ (This is the dollar amount of the dividend) Step 4: Record the stock dividend like this: (total mkt value goes here) (par value only goes here) (plug the rest of it here) NOTE: The Paid in Capital in Excess of Par account is the SAME account that you

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