Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

The following is the shareholders equity section of Novak Corp. at December 31, 2020: Preferred shares, a authorized 110,000 shares; issued 36,000 shares $ 1,152,000

The following is the shareholders equity section of Novak Corp. at December 31, 2020:

Preferred shares,a authorized 110,000 shares; issued 36,000 shares $ 1,152,000
Common shares (unlimited authorized, 66,000 issued) 1,650,000
Contributed surplus 120,000
Total paid-in capital 2,922,000
Retained earnings 2,639,800
Total shareholders equity $ 5,561,800

The preferred shares have a $2 dividend rate, are cumulative, and participate in distributions in excess of a $3 dividend on the common shares.

A) No dividends were paid in 2018 or 2019. On December 31, 2020, Novak wants to pay a cash dividend of $4 per share to common shareholders. How much cash would be needed for the total amount to be paid to preferred and common shareholders? (Round excess return percentage to 4 decimal places, e.g. 52.7531% and final answer to 0 decimal places, e.g. 5,275.)

Preferred Common Total
Amount to be paid to shareholders $ $

B) The company decides instead that it will declare a 20% stock dividend on the outstanding common shares at their fair value. The common shares fair value on the date of declaration is $45 per share. Prepare the entry on the date of declaration. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Account Debit Credit

C) The company decides instead to acquire and cancel 10,300 common shares at the current fair value of $45 per share. Prepare the entry to record the retirement, assuming the contributed surplus balance arose from previous cancellations of common shares. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Account Debit Credit

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Accounting An Introduction

Authors: Jacqui Kew, Alex Watson

4th Edition

0199046484, 978-0199046485

More Books

Students also viewed these Accounting questions

Question

What perspective or approach to talent would be appropriate?

Answered: 1 week ago

Question

What policies and practices for talent development are needed now?

Answered: 1 week ago