Question Details

The entry to record this dividend declaration includes a credit 



1.	Sebastiani Inc. declared a $80,000 cash dividend. It currently has 3,000 shares of 7%, $100 par value cumulative preferred stock outstanding. It is one year in arrears on its preferred stock. How much cash will Sebastiani distribute to the common stockholders?
a.	$38,000.
b.	$42,000.
c.	$59,000.
d.	None of these answer choices are correct.


	2.	Eggers Inc. has retained earnings of $1,600,000 and total stockholders' equity of $4,000,000. It has 400,000 shares of $5 par value common stock outstanding, which is currently selling for $30 per share. If Eggers declares a 10% stock dividend on its common stock:
a.	net income will decrease by $200,000.
b.	retained earnings will decrease by $200,000 and total stockholders' equity will increase by $200,000.
c.	retained earnings will decrease by $1,200,000 and total stockholders' equity will increase by $1,200,000.
d.	retained earnings will decrease by $1,200,000 and total paid-in capital will increase by $1,200,000.


	3.	On December 31, 2014, Stanford, Inc. has 1,500 shares of 6% $100 par value cumulative preferred stock and 90,000 shares of $10 par value common stock outstanding. On December 31, 2014, the directors declare a $30,000 cash dividend. The entry to record the declaration of the dividend would include:
a.	a credit of $30,000 to Cash Dividends.
b.	a note in the financial statements that dividends of $3 per share are in arrears on preferred stock for 2014.
c.	a debit of $30,000 to Common Stock.
d.	a credit of $30,000 to Dividends Payable.


	4.	Nola, Inc. declares a 10% common stock dividend when it has 60,000 shares of $10 par value common stock outstanding. If the market value of $24 per share is used, the amounts debited to Stock Dividends and credited to Paid-in Capital in Excess of Par are:
	Paid-in Capital in
Stock Dividends	     Excess of Par 
a.	$60,000	$0
b.	$144,000	$84,000
c.	$144,000	$60,000
d.	$60,000	$84,000


	5.	Sebold Manufacturing declared a 10% stock dividend when it had 700,000 shares of $3 par value common stock outstanding. The market price per common share was $12 per share when the dividend was declared. The entry to record this dividend declaration includes a credit to
a.	Stock Dividends for $210,000.
b.	Paid-in Capital in Excess of Par for $630,000.
c.	Common Stock for $210,000.
d.	Common Stock Dividends Distributable for $840,000.




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