Question Details

Dividends in arrears on cumulative preferred stock 



1. Which of the following is not a right or preference associated with preferred stock?
a. The right to vote
b. First claim to dividends
c. Preference to corporate assets in case of liquidation
d. To receive dividends in arrears before common stockholders receive dividends
Use the following information for questions 2 and 3.
Cole Corporation issues 15,000 shares of $50 par value preferred stock for cash at $60 per
share.
2. The entry to record the transaction will consist of a debit to Cash for $900,000 and a credit
or credits to
a. Preferred Stock for $900,000.
b. Preferred Stock for $750,000 and Paid-in Capital in Excess of Par Value—Preferred
Stock for $150,000.
c. Preferred Stock for $750,000 and Paid-in Capital from Preferred Stock for $150,000.
d. Paid-in Capital from Preferred Stock for $900,000.
3. In the stockholders' equity section, the effects of the transaction above will be reported
a. entirely within the capital stock section.
b. entirely within the additional paid-in capital section.
c. under both the capital stock and additional paid-in capital sections.
d. entirely under the retained earnings section.
4. Dividends in arrears on cumulative preferred stock
a. never have to be paid.
b. must be paid before common stockholders can receive a dividend.
c. should be recorded as a current liability until they are paid.
d. enable the preferred stockholders to share equally in corporate earnings with the
common stockholders.
5. Dividends in arrears on cumulative preferred stock
a. are considered to be a non-current liability.
b. are considered to be a current liability.
c. only occur when preferred dividends have been declared.
d. should be disclosed in the notes to the financial statements.




Business Management Assignment Help, Business Management Homework help, Business Management Study Help, Business Management Course Help