Problem D-II Cash Dividends Bell Company has stock


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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

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