30) Sweet Company’s outstanding stock consists of 1,100 shares of cumulative 5%
ID: 2596780 • Letter: 3
Question
30) Sweet Company’s outstanding stock consists of 1,100 shares of cumulative 5% preferred stock with a $100 par value and 11,100 shares of common stock with a $10 par value. During the first three years of operation, the corporation declared and paid the following total cash dividends. Dividend Declared year 1 $ 3,100 year 2 $ 7,100 year 3 $ 37,500The amount of dividends paid to preferred and common shareholders in year 3 is: 34) In preparing a company's statement of cash flows for the most recent year using the indirect method, the following information is available: Net income for the year was $ 64,000 Accounts payable decreased by 24,000 Accounts receivable increased by 31,000 Inventories increased by 11,000 Depreciation expense was 42,000
Net cash provided by operating activities was:
30) Sweet Company’s outstanding stock consists of 1,100 shares of cumulative 5% preferred stock with a $100 par value and 11,100 shares of common stock with a $10 par value. During the first three years of operation, the corporation declared and paid the following total cash dividends. Dividend Declared year 1 $ 3,100 year 2 $ 7,100 year 3 $ 37,500
The amount of dividends paid to preferred and common shareholders in year 3 is: 34) In preparing a company's statement of cash flows for the most recent year using the indirect method, the following information is available: Net income for the year was $ 64,000 Accounts payable decreased by 24,000 Accounts receivable increased by 31,000 Inventories increased by 11,000 Depreciation expense was 42,000
Net cash provided by operating activities was:
30) Sweet Company’s outstanding stock consists of 1,100 shares of cumulative 5% preferred stock with a $100 par value and 11,100 shares of common stock with a $10 par value. During the first three years of operation, the corporation declared and paid the following total cash dividends. Dividend Declared year 1 $ 3,100 year 2 $ 7,100 year 3 $ 37,500
The amount of dividends paid to preferred and common shareholders in year 3 is: 34) In preparing a company's statement of cash flows for the most recent year using the indirect method, the following information is available: Net income for the year was $ 64,000 Accounts payable decreased by 24,000 Accounts receivable increased by 31,000 Inventories increased by 11,000 Depreciation expense was 42,000
Net cash provided by operating activities was:
Explanation / Answer
30) Number of 5% preferred stock = 1,100
Face value of 5% preferred stock = $100
Preferred dividend per year = 1,100×100×5% = $5,500
Preferred dividend for 3 years = 3 × Preferred dividend per year = 3×5,500 = $16,500
In Year 1, total dividend paid was $3,100; which was less than the preferred dividend per year. The difference of $2,400 (5,500-3,100) in the dividend declared to the preferred stockholder and dividend paid in year 1 will be covered in the subsequent year.
In Year 2, total dividend paid was $7,100; which represents total preferred dividend of year 2 of $5,500 and remaining $1,600 (7,100-5,500) will be paid to preferred stockholders for the arrears in Year 1 of $2,400. Now, the total arrears of $2,400 is not covered in Year 2, the remaining $800 (2,400-1,600) will be carried forward to year 3.
In Year 3, total dividend paid was $37,500; which represent $5,500 as preferred stock dividend of year 3 and $800 of arrears dividend of preferred stock. Now, the remaining $31,200 (37,500-5,500-800) will be paid to the common shareholders.
Amount of dividend paid to preferred stockholders = 5,500+800 = $6,300
Amount of dividend paid to common stockholders = $31,200
34)
Net income $64,000 Add: Depreciation expense 42,000 Less: Accounts payable decreased 24,000 Less: Accounts receivable increased 31,000 Less: Inventories increased 11,000 Net cash from operating activities $40,000Related Questions
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