Practice Problems: Stockholders' Equity
Complete the demo problems, and self test true/false and multiple choice questions. Check your answers at the end after you finish.
Demonstration problem
Demonstration problem A Violet Company has paid all required preferred dividends through 2004 December 31. Its outstanding stock consists of 10,000 shares of USD 125 par value common stock and 4,000 shares of 6 percent, USD 125 par value preferred stock. During five successive years, the company's dividend declarations were as follows:
| 2005 | $85,000 |
|---|---|
| 2006 | 52,500 |
| 2007 | 7,500 |
| 2008 | 15,000 |
| 2009 | 67,500 |
Compute the amount of dividends that would have been paid to each class of stock in each of the last five years assuming the preferred stock is:
b. Noncumulative.
Demonstration problem B Terrier Company has been authorized to issue 100,000 shares of USD 6 par value common stock and 1,000 shares of 14 percent, cumulative, preferred stock with a par value of USD 12.
a. Prepare the entries for the following transactions that all took place in June 2009:
- 50,000 shares of common stock are issued for cash at USD 24 per share.
- 750 shares of preferred stock are issued for cash at USD 18 per share.
- 1,000 shares of common stock are issued in exchange for legal services
b. Prepare the paid-in capital section of Terrier's balance sheet as of 2009 June 30.
Source: Textbook Equity, https://learn.saylor.org/pluginfile.php/41429/mod_resource/content/15/AccountingPrinciples2.pdf
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