# Problem D-II Cash Dividends Bell Company has stock

### Question Description:

35

Problem D-II — Cash Dividends Bell Company has stock outstanding as follows: Common, \$10 par value per share, 140,000 shares; Preferred, 4%; \$100 par value per share, 8,000 shares. The Preferred is cumulative and participating up to an additional 3% of par; two years are in arrears (not including the current year); and the total amount of cash dividends declared for both classes of stock is \$192,000. Instructions Prepare the entry for the dividend declaration, separating the dividend into the common and preferred portions. Retained Earnings 192,000 Dividends Payable, Preferred 112,000 Dividends Payable, Common 80,000 Computations: Preferred Common Total Arrears—\$800,000 × 4% × 2 \$64,000 \$ 64,000 Preference—\$800,000 × 4% 32,000 32,000 Common—\$1,400,000 × 4% \$ 56,000 56,000 Participating 2%* 16,000 24,000 40,000 \$112,000 \$ 80,000 \$192,000 * [(\$192,000 – \$152,000) ÷ (\$600,000 + \$1,400,000)] what does the \$600,000 of last line, * [(\$192,000 – \$152,000) ÷ (\$600,000 + \$1,400,000)] come from? Tweety2
posted a question · Mar 23, 2015 at 12:09am