Racer Corporation\'s December 31, 201X balance sheet showed the following: 8% pr
ID: 2485070 • Letter: R
Question
Racer Corporation's December 31, 201X balance sheet showed the following:
8% preferred stock, $20 par value, cumulative,
20,000 shares authorized;10,000 shares issued.................$200,000
Common stock, $10 par value, 2,000,000 shares authorized;
1,300,000 shares issued,
1,280,000 shares outstanding..........................................$13,000,000
Paid-in Capital in excess of par value--
.... Preferred stock.....................................................................40,000
Paid-in Capital in excess of par value--
.....Common Stock...............................................................18,000,000
Retained Earnings.................................................................5,100,000
Treasury stock (10,000 shares)..............................................420,000
Racer declared and paid a $50,000 cash dividend on December 15, 201X. If the company's dividends in arrears prior to that date were $12,000. Racer's common stockholders received
Question 4 options:
$38,000
$22,000
$18,000
no dividend
$38,000
$22,000
$18,000
no dividend
Explanation / Answer
Preferred dividend in arrears 12000
Add: Preferred dividend for this year 16000
200000 *8/100*1=16000
Total preferred dividend payable this year 28000
Total cash dividend declared and paid 50000
Less: Proportion of preferred dividend 28000
Dividend paid to equity shareholders (50000-28000) 22000
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