After consulting with a lawyer, they fill in their paperwork and request that the following stock be authorized. Common Stock: 200,000 shares of $3 par stock. Preferred Stock: 90,000 shares of $120 par, 8%, cumulative stock. They issue 25,000 shares of Common Stock at $60 each. They issue 6,000 shares of Preferred Stock at $200 each. April 1. June 1. After a very successful year, they: Dec. 1 Pay a total cash dividend of $60,000 Requirements: a. Write out the journal entry for the issue of stock on April 1. b. Write out the journal entry for the issue of stock on June 1. C. Showing your work and labeling your answers, calculate the dividend paid to the Preferred Stockholders.
After consulting with a lawyer, they fill in their paperwork and request that the following stock be authorized. Common Stock: 200,000 shares of $3 par stock. Preferred Stock: 90,000 shares of $120 par, 8%, cumulative stock. They issue 25,000 shares of Common Stock at $60 each. They issue 6,000 shares of Preferred Stock at $200 each. April 1. June 1. After a very successful year, they: Dec. 1 Pay a total cash dividend of $60,000 Requirements: a. Write out the journal entry for the issue of stock on April 1. b. Write out the journal entry for the issue of stock on June 1. C. Showing your work and labeling your answers, calculate the dividend paid to the Preferred Stockholders.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:2. Corporations: The Carrot Company wishes to become a corporation in Tennessee.
After consulting with a lawyer, they fill in their paperwork and request that the following stock be authorized.
Common Stock: 200,000 shares of $3 par stock.
Preferred Stock: 90,000 shares of $120 par, 8%, cumulative stock.
They issue 25,000 shares of Common Stock at $60 each.
They issue 6,000 shares of Preferred Stock at $200 each.
April 1.
June 1.
After a very successful year, they:
Dec. 1
Pay a total cash dividend of $60,000
Requirements:
a. Write out the journal entry for the issue of stock on April 1.
b. Write out the journal entry for the issue of stock on June 1.
C. Showing your work and labeling your answers, calculate the dividend paid to the Preferred Stockholders.
d. Showing your work and labeling your numbers, calculate the dividend paid to the Common Stockholders.
e. Explain what cumulative preferred stock means?
To help explain, what if the company paid S10,000 in total dividends in the second year.
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