QUESTION 30 CCCR Inc., has 2.000 shares of 6%, S50 par value, cumulative preferr

Question

QUESTION 30 CCCR Inc., has 2.000 shares of 6%, S50 par value, cumulative preferred stock and 100,000 shares of S1 par value common stock outstanding at December 31, 2016, and December 31, 2017. The board of directors declared and paid a $4,000 dividend in 2016 In 2017, $24,000 of dividends are declared and paid. What are the dividends received by the common stockholders in 2017 O A $6,000 $16,000 C $8,000 D $12.000 QUESTION 3 Bond interest paid is O A the same whether bonds sell at a discount or a premium. B. higher when bonds sell at a discount OC higher when bonds sell at a discount and lower when bonds sell at a premium D. lower when bonds sell at a premium QUESTION 32 Rikki Company received proceeds of $188,000 on 10-year, 6% bonds issued on January 1, 2017 The bonds had a face value of S200,000, pay interest annually on December 31 and have a call price of 101. Rikki uses the straight-line method of amortization. What is the amount of interest Rikki must pay the bondholders in 2017? A $11,200 0 $10,800 $13.200 D $12.000

Explanation / Answer

Question 30:

Answer: B. $ 16,000

Annual preferred dividends = 2,000 x $ 50 x 6% = $ 6,000.

Preferred dividends in arrears at the end of 2016 = $ 6,000 - $ 4,000 = $ 2,000.

Amount of dividends available for common stockholders after paying the preferred stockholders = $ 24,000 - $ ( 2,000 + 6,000) = $ 16,000.

Question 31:

Answer: A. The same whether the bonds sell at a discount or a premium.

The coupon payment will be the same. It is computed by applying the stated rate of interest to the par value of the bonds.

Question 32:

D. $ 12,000.

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