Answered: As a result of the share dividend, how…

Business

Accounting

As a result of the share dividend, how much will be debited to Accumulated Profits?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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On May 8, 2022, GMA Corp. declared 10% share dividend to its preference shareholders to be distributed on June 15. On the date of record, the corporation had 26,000 shares of ₱20 par value preference shares that were outstanding. The fair market value of each share is ₱22 at the time of declaration and ₱25 at the time of distribution. As a result of the share dividend, how much will be debited to Accumulated Profits?

Definition Definition Type of stock which is granted priority over dividend distributions as compared to common stockholders. Preferred stocks also do not carry any voting rights. Notably, in a case where a company is going to be liquidated, preferred stockholders have a priority claim on the value of assets of the company as quoted in the balance sheet, as compared to the common stockholders.

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