Distribution practice question

Reference no: EM1364503

A corporation that has both preferred and common stock has a deficit in accuulated earnings and profit at the beginning of the year. The current earnings and profits are $25,000. the corporation makes a divided distribution of $20,000 to the preferred shareholders and $10,000 to the common shareholders. How will the preferred and common shareholders report these distributions?

A) Preferred - $20,000 dividend income; common - $10,000 dividend income

B) Preferred - $20,000 dividend income; common - $5,000 dividend income, $5,000 return of capital

C) Preferred - $15,000 dividend income; common - $10,000 dividend income

D) Preferred- $20,000 return of capital; common - $10,000 return of capital

Reference no: EM1364503

Questions Cloud

Price variance and quantity variance : Explain why the quantity purchased is used in computing the direct materials price variance, but the actual quantity consumed is used in computing the direct materials quantity variance.

The financial planning process : Assume a number of your friends have organized a company to develop and sell a new software product. They have asked you to loan them $10,000 to help get the corporation started,

Religious beliefs among native americans : Religious beliefs in China and religious beliefs among Native Americans are difficult to separate from beliefs about the material world.

Illustrate what is the new market price : A concerned Congress votes to impose a price floor $2 above the equilibrium price. Illustrate what is the new market price.

Distribution practice question : A corporation that has both preferred and common stock has a deficit in accuulated earnings and profit at the beginning of the year. The current earnings and profits are $25,000.

Free and competitive markets and the tabacco industry : Do you believe that a free and competitive market should determine the success of a product or service? Or do you believe that the government should have more control over the market?

How much charge is applied to each of the cylinders : How much charge is applied to each of the cylinders.

The ramifications of groupthink : Describe a situation where you experienced groupthink. Were you able to overcome groupthink in that situation? If so, how? If not, why?

Compute its current position in terms company''s key : Compute its current position in terms of two (2) of the company's key competitors and the industry as a whole

User Account

All Pages