The Ted Williams Corporation has the following stock outstanding: 100,000 shares of cumulative preferred 4% stock with a $12 par value 300,000 shares of common stock with a $1 par value During the first five years of operations the company paid the following cash dividends: Year 1- Year 225,000 Year 380,000 Year 490,000 Year 5120,000 a. Calculate the expected preferred annual dividend. b. Determine the dividend payouts for each class of stock over the five years. c. Record the journal entries for Year 3, if the dividend declaration date was October 2, the date of record was Oct 18, and the date of payment was November 5.

Answered: The Ted Williams Corporation has the…

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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The Ted Williams Corporation has the following stock outstanding:
100,000 shares of cumulative preferred 4% stock with a $12 par value
300,000 shares of common stock with a $1 par value

During the first five years of operations the company paid the following cash dividends:

Year 1	-
Year 2	25,000
Year 3	80,000
Year 4	90,000
Year 5	120,000

a. Calculate the expected preferred annual dividend.
b. Determine the dividend payouts for each class of stock over the five years.
c. Record the journal entries for Year 3, if the dividend declaration date was October 2,
the date of record was Oct 18, and the date of payment was November 5.

Expert Solution

Step 1

Dividend :— The annual or Interim Return paid by the Company to their Preference Shareholders or Equity Share holders is Called Dividend. Dividend is payable Out of Profit and from Retained Earning.

If any Dividend is Declared by the Company it is Compulsory that the Company shall pay First Preference Dividend from the Current year profit then Remaining should be paid to Equity Share holders.

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