Reference no: EM132902613
Questions -
Q1. ABC company has two classes of stock: A preferred that has a market value of $125 per share and a par value of $100, with a 6% cumulative dividend, 10000 shares issued and outstanding. A common stock that was issued at $20 per share, no par value, 50000 shares issued and outstanding.
ABC paid cash dividends of $75000 in 2007, $50,000 in 2008, and $80,000 in 2009. For 2007 indicate how much of the dividend the Preferred shareholders and common shareholders received. In 2007
A. Preferred 60,000, Common 15,000
B. Preferred 75,000, Common 0
C. Preferred 10,000 Common 65,000
D. Preferred 50,000 Common 15,000
Q2. If a company issues 1,000 shares of common stock at a market price of $20 per share, which of the following is the correct balance sheet effect?
A. Increase cash by $20,000 and increase contributed capital by $20,000
B. Increase cash by $20,000 and increase earned capital by $20,000
C. Increase stock revenues by $20,000
D. Stock issuances are not reported on the balance sheet
E. None of the above