15) Which of the following occurs when a dividend is declared?
A) Liabilities increase.
B) Equity increases.
C) Liabilities decrease.
D) Assets increase.
16) Which of the following is TRUE of dividends in arrears?
A) Dividends in arrears are a liability on the balance sheet.
B) Dividends in arrears are passed dividends on noncumulative preferred stock.
C) Dividends in arrears are passed dividends on cumulative preferred stock.
D) Dividends in arrears are passed dividends on common stock.
17) A corporation has 10,000 shares of 10%, $50 par noncumulative preferred stock outstanding and 20,000 shares of no-par common stock outstanding. At the end of the current year, the corporation declares a dividend of $120,000.
How is the dividend allocated between preferred and common stockholders?
A) The dividend is allocated $5,000 to preferred shareholders and $115,000 to common shareholders.
B) The dividend is allocated $50,000 to preferred shareholders and $70,000 to common shareholders.
C) The dividend is allocated $60,000 to preferred shareholders and $60,000 to common shareholders.
D) The dividend is allocated $12,000 to preferred shareholders and $108,000 to common shareholders.
18) A corporation has 10,000 shares of 10%, $50 par noncumulative preferred stock outstanding and 20,000 shares of no-par common stock outstanding. At the end of the current year, the corporation declares a dividend of $120,000.
What is the dividend per share for preferred shares and for common shares?
A) The dividend per share is $5.00 to preferred shares and $3.50 to common shares.
B) The dividend per share is $6.67 to preferred shares and $1.50 to common shares.
C) The dividend per share is $1.00 to preferred shares and $6.75 to common shares.
D) The dividend per share is $50.00 to preferred shares and $1.00 to common shares.
19) On November 1, 2014, Oster Company declared a dividend of $3.00 per share. Oster Company has 20,000 shares of common stock outstanding and no preferred stock. Which of the following is the journal entry needed to record the declaration of dividends?
A) Debit Dividends payable $60,000 and credit Retained earnings $60,000.
B) Debit Retained earnings $60,000 and credit Cash $60,000.
C) Debit Retained earnings $60,000 and credit Dividends payable $60,000.
D) Debit Cash $60,000 and credit Dividends payable $60,000.
20) On November 1, 2014, Oster Company declared a dividend of $3.00 per share. Oster Company has 20,000 shares of common stock outstanding and no preferred stock. The date of record is November 15, and the payment date is November 30, 2014. Which of the following statements is TRUE about the date of record?
A) No journal entry is made on the date of record.
B) The liability must be recorded on the date of record.
C) Cash is disbursed to shareholders on the date of record.
D) The company transfers cash to a brokerage firm on the date of record.
21) On November 1, 2014, Oster Company declared a dividend of $3.00 per share. Oster Company has 20,000 shares of common stock outstanding and no preferred stock. The date of record is November 15, and the payment date is November 30, 2014. Which of the following is the journal entry needed on November 30?
A) Debit Retained earnings $60,000 and credit Dividends payable $60,000.
B) Debit Dividends payable $60,000 and credit Cash $60,000.
C) Debit Cash $60,000 and credit Dividends payable $60,000.
D) Debit Retained earnings $60,000 and credit Cash $60,000.
22) Pearland Company has 2,000 shares of preferred stock outstanding. The preferred stock has a $100 par value, a 5% dividend rate, and is non-cumulative. If Pearland has sufficient funds to pay dividends, what is the total amount of dividends that will be paid out to preferred shareholders?
A) $10,000
B) $2,000
C) $1,000
D) $5,000
23) Which of the following is TRUE about the date of record?
A) On the date of record, the company issues new shares of stock.
B) On the date of record, the company disburses dividend payments to shareholders.
C) On the date of record, the company records the dividend payable amount.
D) On the date of record, the company determines who owns the shares of stock as of that date.
24) Occidental Produce Company has 40,000 shares of common stock outstanding and 2,000 shares of preferred stock outstanding. The common stock is $0.01 par value; the preferred stock is 4% non-cumulative, with $100 par value. On October 15, 2014, the company declares a total dividend payment of $40,000. How much dividend will be paid to the preferred shareholders?
A) $40,000
B) $2,000
C) $8,000
D) $4,500