2-24-11 Solutions

2-24-11 Solutions - Q15-14 Nonparticipating means the...

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Q15-14 Nonparticipating means the security holder is entitled to no more than the specified fixed dividend. If the security is partially participating, it means that in addition to the specified fixed dividend the security may participate with the common stock in dividends up to a certain stated rate or amount. A fully participating security shares pro rata with the common stock dividends declared without limitation. In this case, Dagwood Inc. has a fully participating preferred stock. Cumulative means dividends not paid in any year must be made up in a later year before any profits can be distributed to common stockholders. Any dividends not paid on cumulative preferred stock constitute a dividend in arrears. A dividend in arrears is not a liability until the board of directors declares a dividend. EXERCISE 15-12 (a) 6/1 Retained Earnings. ................................................ 6,000,000 Dividends Payable. ................................... 6,000,000 6/14 No entry on date of record. 6/30
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2-24-11 Solutions - Q15-14 Nonparticipating means the...

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