Question
14. On January 1, 2018, when the market value of their common shares was $20 per share, Belgrade Inc. declared a 10% common stock dividend.
14. On January 1, 2018, when the market value of their common shares was $20 per share, Belgrade Inc. declared a 10% common stock dividend. Shareholders' equity before the stock dividend was declared was:
Common shares, no par value, authorized 200,000 shares, issued and outstanding 120,000 shares
Retained earnings Total shareholders' equity
$1,350,000 1,700,000 $3,050,000
What was the effect on Belgrades retained earnings as a result of the stock dividend? a) $240,000 decrease b) $400,000 decrease c) $480,000 decrease
d) $800,000 decrease
15. Warsaw Ltd. has 100,000 no par value common shares authorized, issued, and outstanding. All 100,000 shares were issued at $8 per share. Retained earnings are $120,000. If 10,000 common shares were reacquired at $6 and cancelled,
a) shareholders' equity would decrease $80,000. b) contributed surplus would increase $20,000. c) contributed surplus would decrease $20,000. d) retained earnings would decrease $10,000.
16. Vilnius Corporation has 100,000 no par value common shares authorized, issued and outstanding. All 100,000 shares were issued at $90 per share. Retained earnings are $250,000. If 2,000 shares were reacquired at $98 and cancelled, shareholders' equity would decrease by
a) $ 0. b) $ 16,000. c) $180,000. d) $196,000.
17. On December 31, 2018, Monaco Ltd. had outstanding 2,000 no par value, $6, cumulative preferred shares and 30,000 no par value common shares. At this time, dividends in arrears on the preferred shares were $6,000. Cash dividends declared in 2019 totalled $30,000. The amounts paid to each class of shares were
Preferred Shares
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a) $6,000
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b) $12,000
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c) $24,000
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d) $18,000
Common Shares $24,000 $18,000 $6,000
$12,000
Use the following information for questions 1820.
Riga Ltd. has outstanding 100,000 no par common shares and 20,000 no par, $0.40, preferred shares issued at $5 each. The preferred shares are cumulative and non-participating. Dividends have been paid every year except the past two years and the current year.
18. Assuming that $50,000 will be distributed as a dividend in the current year, how much will the common shareholders receive? a) $24,000 b) $26,000
c) $34,000 d) $42,000
19. Assuming that $21,000 will be distributed as a dividend in the current year, how much will the preferred shareholders receive? a) $ 0 b) $ 8,000
c) $16,000 d) $21,000
20. The Common Shares account currently shows a balance of $200,000. Assuming that $61,000 will be distributed as a dividend in the current year, and the preferred shares are also fully participating, how much will the common shareholders receive? a) $37,000
b) $30,000
c) $31,000
d) $16,000
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