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Home / Questions / Dividends in arrears on cumulative preferred shares are:

Dividends in arrears on cumulative preferred shares are:

 Dividends in arrears on cumulative preferred shares are:

A) reported as a current liability on the balance sheet

B) reported as a long-term liability on the balance sheet

C) ignored on the financial statements

D) disclosed in the notes to the financial statements

13) Prevage Corporation has 10,000 shares of $10 cumulative preferred shares outstanding and 50,000 common shares outstanding. As of the beginning of this fiscal year, there were 2 years' dividends in arrears on the preferred shares. The board of directors wants to give the common shareholders a $1.50 dividend per share at the end of this fiscal year. The total dividends to be declared by the Prevage Corporation are:

A) $105,000

B) $120,000

C) $175,000

D) $375,000

14) Health & Wellness Corporation has had 7,500 shares of $3.00 cumulative preferred shares outstanding as well as 28,000 common shares issued at $10 outstanding since it was incorporated. During the first, second, and third years of operations, $15,000, $18,000, and $50,000 in dividends, respectively, were paid. The dividends paid to the common shareholders of Health & Wellness Corporation in year three amounted to:

A) $0

B) $15,500

C) $27,500

D) cannot be determined from the given information

15) A stock dividend is issued for the following reasons except:

A) to continue dividends but conserve cash

B) to reduce the per-share market price of the shares

C) to reduce total shareholders' equity

D) to increase the shares account and decrease Retained Earnings

16) The entry to record the distribution of a stock dividend includes a:

A) credit to Common Shares

B) debit to Retained Earnings

C) credit to Retained Earnings

D) credit to Common Shares and a debit to Retained Earnings

17) A stock dividend will:

A) reduce total assets

B) have no effect on total assets

C) have no effect on total assets or total owners' equity

D) increase total owners' equity

18) When accounting for a stock dividend, Retained Earnings should be debited for:

A) par value times the number of shares to be issued

B) book value times the number of shares to be issued

C) current market value times the number of shares to be issued

D) liquidation value times the number of shares to be issued

19) Which of the following statements regarding stock splits is incorrect?

A) A stock split increases total owners' equity.

B) A stock split involves a reduction in the share's issue value.

C) A stock split decreases the market price of the shares.

D) A stock split is an increase in the number of authorized, issued, and outstanding shares.

20) Following is the shareholders' equity section of the balance sheet of the Everslim Company:

Share capital:

Preferred shares, 420,000 shares authorized,

4,000 shares of $1.50 preferred issued$400,000

Common shares, 100,000 shares authorized,

30,000 shares issued 150,000

Total share capital$550,000

Retained earnings 267,000

Total shareholders' equity$817,000

The preferred shares are currently selling for $102.25 per share and the common shares are currently selling for $11.50 per share.

The entry to record the distribution of a $66,000 dividend includes a:

A) credit to Dividends Payable, Preferred for $6,000

B) credit to Dividends Payable, Preferred for $66,000

C) debit to Common Shares for $6,000

Dec 09 2019 View more View Less

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