Chapter 13: Q15RQ (page 707)
What is a stock dividend?
A stock dividend is an appropriation of a corporation's own stock to its stockholders.
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Analyzing the effect of prior-period adjustments
Taylor Corporation discovered in 2019 that it had incorrectly recorded in 2018 a cash payment of \(70,000 for utilities expense. The correct amount of the utilities expense was \)35,000.
Requirements
1. Determine the effect of the error on the accounting equation in 2018.
Question: Dividing cash dividends between preferred and common stock
Copperhead Trust has the following classes of stock:
Preferred Stock—6%, \(12 par value; 8,500 shares authorized, 7,000 shares issued and outstanding
Common Stock—\)0.10 par value; 2,100,000 shares authorized, 1,400,000 shares issued and outstanding
Requirements
1. Copperhead declares cash dividends of $44,000 for 2018. How much of the dividends goes to preferred stockholders? How much goes to common stockholders?
What is treasury stock? What type of account is Treasury Stock, and what is the account’s normal balance?
How does authorized stock differ from ouststanding stock?
Question: Accounting for cash dividends
Java Company earned net income of \(85,000 during the year ended December 31, 2018. On December 15, Java declared the annual cash dividend on its 4% preferred stock (par value, \)120,000) and a $0.25 per share cash dividend on its common stock (50,000 shares). Java then paid the dividends on January 4, 2019.
Requirements
1. Journalize for Java the entry declaring the cash dividends on December 15, 2018.
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