Question
Ehrlich Corporation has the following capital structure at the beginning of the year: 5% Preferred stock, $100 par value, 20,000 shares authorized, 6,000 shares issued
Ehrlich Corporation has the following capital structure at the beginning of the year:
5% Preferred stock, $100 par value, 20,000 shares authorized,
6,000 shares issued and outstanding $ 600,000
Common stock, $10 par value, 60,000 shares authorized,
40,000 shares issued and outstanding 400,000
Paid-in capital in excess of par 110,000
Total paid-in capital 1,110,000
Retained earnings 540,000
Total stockholders' equity $1,650,000
Instructions
Record the following transactions (show all calculations).
1. The board of directors approved a $95,000 cash dividend for the preferred and common stockholders. Record the journal entries for the declaration and the payment of the dividend.
2. A 15% common stock dividend was declared. The average fair value of the common stock is $23 a share. Prepare the journal entry for the declaration of the dividend and for the distribution of the stock.
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