Question

The charter of a corporation provides for the issuance of 100,000 shares of common stock. Assume that 60,000 shares were originally issued and 10,000 were subsequently reacquired. What is the amount of cash dividends to be paid if a $2 per share dividend is declared?

a. $60,000
b. $20,000
c. $120,000
d. $100,000

Answer 1

The amount of cash dividends to be paid is $100,000.

Step-by-step explanation:

To calculate the amount of cash dividends to be paid, we need to consider the number of shares outstanding and the dividend per share.

In this case, the charter of the corporation provides for the issuance of 100,000 shares of common stock. 60,000 shares were originally issued, and 10,000 were subsequently reacquired. Therefore, the number of shares outstanding is 60,000 - 10,000 = 50,000 shares.

The amount of cash dividends to be paid is calculated by multiplying the number of shares outstanding by the dividend per share: 50,000 shares * $2 per share = $100,000.