Question

Pug Corporation has 22,000 shares of $10 par common stock outstanding and 32,000 shares of $100 par, 6% noncumulative, nonparticipating preferred stock outstanding. Dividends have not been paid for the past two years. This year, a $330,000 dividend will be paid. What are the dividends per share for preferred and common, respectively? Multiple Choice 0 $10.3; $0.0. 0 $6.0; $6.3 0 O $6.0; $4.3. 0 None of these answer choices are correct. ABC declared a property dividend. The dividend consisted of 8,000 common shares of its investment in XYZ Company. The shares had originally been purchased at $4 per share and had a $1 par. The value of the shares on the declaration date is $9 per share. What is the first entry that should be recorded related to this dividend? Multiple Choice 72,000 Retained earnings Property dividends payable Gain 32,000 40,000 72,000 Oo oo Retained earnings | Property dividends payable Retrospect ea riungends payable 72,000 72,008) 72,000 40,000 Investment in equity securities (XYZ) Gain on investments 40,000 40,000 Investment in equity securities (XYZ) Retained earnings 40,000

Answer 1

The dividends per share for preferred and common stock, respectively is: $10.31; $15.00. None of the answer choices are correct.

The entry reflects the transfer of $72,000 from retained earnings to the property dividends payable account. (Option A).

How to Solve the Problem?

A. To calculate the dividends per share for preferred and common stock, we need to consider the number of shares outstanding for each type of stock.

Preferred Stock:

Number of shares of preferred stock = 32,000

Dividend per share = $330,000 / 32,000 = $10.31 (rounded to two decimal places)

Common Stock:

Number of shares of common stock = 22,000

Dividend per share = $330,000 / 22,000 = $15.00 (rounded to two decimal places)

B. The first entry that should be recorded related to this dividend is:

Retained earnings (debit) - $72,000

Property dividends payable (credit) - $72,000

This entry reflects the transfer of $72,000 from retained earnings to the property dividends payable account.