Exam 13: Accounting for Corporations

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Question 121

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West Company declared a $0.50 per share cash dividend. The company has 190,000 shares issued, and 10,000 shares in treasury stock. The journal entry to record the dividend declaration is:

A) Debit Common Dividends Payable $90,000; credit Cash $90,000.
B) Debit Common Dividends Payable $95,000; credit Cash $95,000.
C) Debit Retained Earnings $95,000; credit Common Dividends Payable $95,000.
D) Debit Retained Earnings $5,000; credit Common Dividends Payable $5,000.
E) Debit Retained Earnings $90,000; credit Common Dividends Payable $90,000.

F) A) and B)
G) B) and E)

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Question 122

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The stockholders' equity section of a company's year-end balance sheet follows: 109 $\begin{array}{l|l|l}\text { Preferred stock, } \$ 50 \text { par value, } 9 \% \text { cumulative and } & \$ 500,000 \\\text { nonparticipating, } 10,000 \text { shares outstanding } & \\\hline \text { Paid-in capital in excess of par value, preferred stock } & \underline{50,000}\\\hline\text { Total capital paid-in by preferred stockholders }&&\$550,000\end{array}$ $\begin{array}{l|l|l}\text { Preferred stock, } \$ 50 \text { par value, } 9 \% \text { cumulative and } & \$ 500,000 \\\text { nonparticipating, } 10,000 \text { shares outstanding } & \\\hline \text { Paid-in capital in excess of par value, preferred stock } & \underline{50,000}\\\hline\text { Total capital paid-in by preferred stockholders }&&\$550,000\end{array}$ $\begin{array}{|l|l|l|}\hline\text { Total capital paid-in by preferred stockholders } &&\$550,000 \\\hline \text { Common stock, } \$ 0.50 \text { par value, } 1,500,000 \text { shares } & \$ 750,000 \\\text { outstanding }\\ \hline \text { Paid-in capital in excess of par value, common stock }&150,000\\ \hline \text { Total capital paid-in by common stockholders } && 900,000 \\\hline \text { Total paid-in capital } && \$ 1,450,000 \\\hline \text { Retained earnings } && 1,690,000 \\\hline \text {Total stockholders' equity}&&\$ 3,140,000\\\hline\end{array}$ The preferred stock has a call price of $51.50 per share plus dividends in arrears. Only one year of dividends is in arrears. Calculate the book value per (1) preferred share, and (2) common share.