QUESTION 14 Four thousand bonds with a face value of $1,000 each, are sold at 10

Question

QUESTION 14 Four thousand bonds with a face value of $1,000 each, are sold at 105. The entry to record the issuance is O A Cash ,200,000 Bonds Payable ,200,000 B. Cash 200,000 Discount on Bonds Payable Bonds Payable 200,000 ,000,000 C. Cash 4,000,000 200,000 Premium on Bonds Payable Bonds Payable 4200,000 200000 200,000 4,000,000 D. Cash Premium on Bonds Payable Bonds Payable QUESTION 15 Peabody Inc has 5 000 shares of 7%. $100 par value, cumulative preferred stock and 50,000 shares of $1 par value common stock outstanding at December 31, 2017 If the board of directors declares a $30,000 dividend the O A preferred shareholders will receive the entire $30,000 B preferred shareholders will receive $15,000 and the common shareholders will recelve $15,000 O C preferred shareholders will receive 1/10th of what the common shareholders will receive D.$30,000 will be held as restricted retained earnings and paid out at some future date

Explanation / Answer

Question 14 :

Answer : D.

Question 15:

Answer: A.

Preferred dividends due = 5,000 x $ 100 x 7 % = $ 35,000.

The entire $ 30,000 of dividends declared for the current year will be paid to the preferred stockholders. The balance of $ 5,000 will be carried forward and paid out of profits in future years, as the preferred stock is cumulative.

The common stockholders will not be paid dividends until the dues of the preferred stockholders are met.

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