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# week 5 - 15-7 a At date of declaration 6 on the preferred...

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15-7 a) At date of declaration (December 21, 2007) 6% on the preferred stock Retained earnings \$12,000.00 CASH \$12,000.00 Computatio: (6% x \$200,000) = 12,000 Prefferred stocks in arrear Retained earnings \$12,000.00 Treasury stock \$12,000.00 Computation: 1,500 shares X \$8 share \$12,000.00 \$0.30 per share common stock Retained earning \$89,190.00 Cash \$89,190.00 Computation: Common stock as of 12/31/06 \$300,000.00 Less treasury stock \$4,200.00 Total as of 12/31/06 \$295,800.00 Less paid in arrear \$1,500.00 Total remaining for common \$294,300.00 Common stock at .30/share X0.30 Common stock cash dividend \$88,290.00 b) Yes Preffered stock in arrear \$12,000.00 Current preferred stock \$12,000.00 Common stock \$89,190.00 Total stock to be paid \$113,190.00 Balance \$105,000.00 Plus net incom \$77,000.00 Available cash \$182,000.00 Less treasury stock \$33,600.00 Available cash \$148,400.00 Available > required 148,400 > 113,190

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a) Declare & Pay \$0.50 per share cash dividend Total Assets Decrease cash (0.50*10,000 shares) \$(5,000.00) Common stock no effect Paid in capital in excess of par no effect Retained earning Decrease (10,000*.50) \$(5,000.00) Total stock holder equity Decrease \$(5,000.00) b) Declare & issue a 10% stock dividend when market price is \$14/share Total Assets no effect Common stock increase (10,000*.10)*\$2 \$2,000.00
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week 5 - 15-7 a At date of declaration 6 on the preferred...

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