APPLY THE CONCEPTS: Calculate the common and preferred dividends Pacioli Corpora
ID: 2424108 • Letter: A
Question
APPLY THE CONCEPTS: Calculate the common and preferred dividends Pacioli Corporation has been incorporated for 30 years. Its current paid-in capital is shown to the right. Pacioli has been expanding its operations; its board of directors declared a small dividend of $2,000 in 2009 and no dividend in 2010. The expansion was a success, and profits have increased. On December 3, 2011, the board of directors declared a dividend of $316,500 to stockholders on record at December 22, 2011, to be paid on December 29, 2011. Paid-in capital for Pacioli Corporation: Preferred stock, $10 par, 5%, 12,000 shares authorized, 7,000 shares issued and outstanding $70,000 Common stock, $3 par, 200,000 shares authorized, 150,000 shares issued, 140,000 shares outstanding 450,000 Additional paid-in capital—preferred stock 49,000 Additional paid-in capital—common stock 168,000 Total paid-in capital $737,000 Determine the annual preferred dividend, assuming the number of shares of preferred stock issued and outstanding has not changed for the past three years: $? x ?% x? shares = $? How much dividend is in arrears for 2009? $? How much dividend is in arrears for 2010? $? Use the information in the above table and calculated to the above to complete the table below to illustrate the distribution of the 2011 dividend. Total 2011 dividend declared $ ?2009 Dividends in arrears for 2009 $? 2010 Dividends in arrears for 2010 $? 2011 Current dividend $ ?Total preferred dividends $ Dividends to common stockholders $ After you have determined the dividends available to the common stockholders, calculate the dividend per share to be paid to each common stockholder. If required, round the per share amount to the nearest cent. $ = $ per share shares Show All Feedback Hide APPLY THE CONCEPTS: Prepare the journal entries for Pacioli’s dividend> Pacioli uses temporary accounts to record dividends and closes those accounts to Retained Earnings at the end of the period. Use the selection lists to the left of the journal to illustrate the effect on the accounting equation. If you are not sure about the account titles, refer to the chart of accounts below the last journal entry. Prepare the journal entry for preferred dividends required on the declaration date. GENERAL JOURNAL page DATE DESCRIPTION DOC. NO. POST. REF. DEBIT CREDIT 1 Dec. 3 1 2 2
Explanation / Answer
5% Preferred stock $ 10 par No.of shares Value Arrears % Issued and o/s 7000 70000 Dividends 2009 7000 2000 2000 2.86% 2010 0 2000 2011 7000 3500 5500 5% Common Stock $ 3 par O/s shares 140000 420000 Dividend/share Dividends 2009 140000 0 2010 140000 0 2011 140000 316500-3500 313000 2.23571 $ 2.24 Account Titles Debit Credit 2009 Preferred Dividends 2000 Preferred Dividends Payables 2000 (On declaration of Dividend) Retained Earnings 2000 Preferred Dividends 2000 (Closure of div. to Ret.Earnings) 2011 Preferred Dividends 3500 Preferred Dividends Payables 3500 (On declaration of Dividend) Retained Earnings 3500 Preferred Dividends 3500 (Closure of div. to Ret.Earnings) 2011 Equity Dividends 313000 Equity Dividends Payables 313000 (On declaration of Dividend) Retained Earnings 313000 Equity Dividends 313000 (Closure of div. to Ret.Earnings)