Ultimate Sportswear has $160,000 of 9% noncumulative, nonparticipating, preferre

Question

Ultimate Sportswear has $160,000 of 9% noncumulative, nonparticipating, preferred stock outstanding. Ultimate Sportswear also has $560,000 of common stock outstanding. In the company's first year of operation, no dividends were paid. During the second year, the company paid cash dividends of $36,000. This dividend should be distributed as follows:
a. $0 preferred; $36,000 common.
c. $19,000 preferred; $17,000 common.
d. $9,000 preferred; $27,000 common.
e. $14,400 preferred; $21,600 common.

Eastline Corporation had 15,500 shares of $5 par value common stock outstanding when the board of directors declared a stock dividend of 4,805 shares. At the time of the stock dividend, the market value per share was $13. The entry to record this dividend is:
a. No entry is needed.
b. Debit Retained Earnings $24,025; credit Common Stock Dividend Distributable $24,025.
c. Debit Retained Earnings $62,465; credit Common Stock Dividend Distributable $62,465.
e. Debit Common Stock Dividend Distributable $62,465; credit Retained Earnings $62,465.

A company's Inventory balance at the end of the year was $197,000 and $210,000 at the beginning of the year. Its Accounts Payable balance at the end of the year was $94,000 and $89,000 at the beginning of the year, and its cost of goods sold for the year was $730,000. The company's total amount of cash payments for merchandise during the year equals:
a. $712,000.
c. $738,000.
d. $730,000.
e. $722,000.

Cantrell Company is required by law to collect and remit sales taxes to the state. If Cantrell has $6,500 of cash sales that are subject to a 9% sales tax, what is the journal entry to record the cash sales?
a. a. Debit Cash $7,085; credit Sales $6,500; credit Sales Taxes Payable $585.
b. Debit Accounts Receivable $7,085; credit Sales $6,500; credit Sales Taxes Payable $585.
d. Debit Sales Taxes Payable $585; debit Cash $5,915; credit Sales $6,500.
e. Debit Cash $6,500; credit Sales $6,500; and record the taxes when paid.

I have removed the wrong answer which is why there are only 4 answers to choose from. Thank you very much :D for your help.

Explanation / Answer

1 Dividend to be distributed as follows: Preferred dividend=160000*9%=14400 Common dividend=balance=36000-14400=21600 Answer is e.$14,400 preferred; $21,600 common. 2 Par value of new stock=4805*5=24025 % of stock dividend=(4805/15500)*100=31% Hence,it is a large stock dividend.Record at par value Answer is b. Debit Retained Earnings $24,025; credit Common Stock Dividend Distributable $24,025. 3 Cost of goods sold=Beginning inventory+purchases-Ending inventory purchases=Ending inventory+Cost of goods sold-Beginning inventory Purchase=197000+730000-210000=717000 Assume all purchases are credit purchases Accounts payable: Beginning balance 89000 Add:purchases 717000 806000 Less:ending balance 94000 cash payments for merchandise 712000 Answer is a. $712000 4 Answer is a.Debit Cash $7,085; credit Sales $6,500; credit Sales Taxes Payable $585.

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