2-22-11 Solutions

2-22-11 Solutions - Q15-3 Preferred stock commonly has...

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Q15-3 Preferred stock commonly has preference to dividends in the form of a fixed dividend rate and a preference over common stock to remaining corporate assets in the event of liquidation. Preferred stock usually does not give the holder the right to share in the management of the company. Common stock is the residual security possessing the greater risk of loss and the greater potential for gain; it is guaranteed neither dividends nor assets upon dissolution but it generally controls the management. EXERCISE 15-1 (a) Jan. 10 Cash (80,000 X $6). ................................................... 480,000 Common Stock (80,000 X $3). .......................... 240,000 Paid-in Capital in Excess of Par. ........................ 240,000 Mar. 1 Organization Expense. ............................................... 35,000 Common Stock (5,000 X $3). ............................ 15,000 Paid-in Capital in Excess of Par. ........................ 20,000 July 1 Cash (30,000 X $8). ................................................... 240,000 Common Stock (30,000 X $3). .......................... 90,000 Paid-in Capital in Excess of Par (30,000 X $5). ................................................ 150,000 Sept. 1 Cash (60,000 X $10). ................................................. 600,000 Common Stock (60,000 X $3). .......................... 180,000 Paid-in Capital in Excess of Par (60,000 X $7). ................................................ 420,000 (b) Jan. 10 Cash (80,000 X $6). ................................................... 480,000 Common Stock (80,000 X $2). .......................... 160,000
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This note was uploaded on 03/03/2012 for the course MGMT 351 taught by Professor Staff during the Spring '08 term at Purdue.

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2-22-11 Solutions - Q15-3 Preferred stock commonly has...

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