ch11 in class

ch11 in class - DO IT! 11-5 1. The company has not missed...

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DO IT! 11-5 1. The company has not missed past dividends and the preferred stock is noncumulative; thus, the preferred stockholders are paid only this year’s dividend. The dividend paid to preferred stockholders would be $21,000 (3,000 X .07 X $100). The dividend paid to common stockholders would be $84,000 ($105,000 – $21,000). 2. The preferred stock is noncumulative; thus, past unpaid dividends do not have to be paid. The dividend paid to preferred stockholders would be $21,000 (3,000 X .07 X $100). The dividend paid to common stockholders would be $84,000 ($105,000 – $21,000). 3. The preferred stock is cumulative; thus, dividends that have been missed in the past (dividends in arrears) must be paid. The dividend paid to preferred stockholders would be $63,000 (3 X 3,000 X .07 X $100). The dividend paid to common stockholders would be $42,000 ($105,000 – $63,000). EXERCISE 11-3 (a) Jan. 10 Cash (70,000 X $5). ................................. 350,000 Common Stock. ............................... 350,000 July 1 Cash (40,000 X $8). ................................. 320,000 Common Stock (40,000 X $5). ........ 200,000 Paid-in Capital in Excess of Par Value (40,000 X $3). .............. 120,000 (b) Jan. 10 Cash (70,000 X $5). ................................. 350,000 Common Stock (70,000 X $1). ........ 70,000 Paid-in Capital in Excess of Stated Value (70,000 X $4). ......... 280,000 July 1 Cash (40,000 X $8). ................................. 320,000 Common Stock (40,000 X $1). ........ 40,000 Paid-in Capital in Excess of Stated Value (40,000 X $7). ......... 280,000
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ch11 in class - DO IT! 11-5 1. The company has not missed...

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