Question
The following share capital information is available for a corporation with an April 30, 2022 year-end: The shares were issued when the corporation began operations
The following share capital information is available for a corporation with an April 30, 2022 year-end: The shares were issued when the corporation began operations on May 1, 2015. No dividends were declared during the fiscal years ended 2020 and 2021. On February 28, 2022, the board of directors declared the required preferred share dividends and a $0.55 dividend for each of the common shares. The dividends are payable on April 1, 2022, to the shareholders of record on March 15, 2022.
Preferred shares, $2.25 cumulative, 40,000 shares issued | $1,000,000 | |
Preferred shares, $4.25 noncumulative, 11,000 shares issued | 600,000 | |
Common shares, 160,000 shares issued | 800,000 |
How much will be paid to each class of shares?
Year | Cumulative Preferred | Non-cumulative Preferred | Common | |||
2020 | $ | $ | $ | |||
2021 | $ | $ | $ | |||
2022 | $ | $ | $ |
Question Part Score
--/9
Prepare journal entries on the appropriate dates for the 2022 dividends. (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.)
Date | Account Titles and Explanation | Debit | Credit |
Feb. 28, 2022 | Cash Dividends - PreferredCashPrepaid ExpensesDividends PayableSalaries ExpenseSalaries PayableCash Dividends - CommonOffice Expense | ||
Prepaid ExpensesCash Dividends - CommonOffice ExpenseDividends PayableCashSalaries PayableCash Dividends - PreferredSalaries Expense | |||
Salaries ExpenseCashOffice ExpenseSalaries PayableCash Dividends - CommonPrepaid ExpensesCash Dividends - PreferredDividends Payable | |||
Salaries ExpenseCashPrepaid ExpensesOffice ExpenseSalaries PayableCash Dividends - PreferredDividends PayableCash Dividends - Common | |||
April 1, 2022 | Cash Dividends - CommonCashSalaries PayableCash Dividends - PreferredOffice ExpenseSalaries ExpensePrepaid ExpensesDividends Payable | ||
Prepaid ExpensesCashCash Dividends - PreferredSalaries ExpenseSalaries PayableCash Dividends - CommonDividends PayableOffice Expense |
Question Part Score
--/6
Assume instead that the maximum cash dividend the company can pay is $384,750. Determine how much will be paid to the preferred shareholders and to the common shareholders.
Year | Cumulative Preferred | Non-cumulative Preferred | Common | |||
2022 | $ | $ | $ |
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