Solution-How would the dividend have been allocated

How would the dividend have been allocated

Reference no: EM133140579

Question - Old McDonald had a goat farm. MacDonald Farm Products (MFP) was created on January 1, 2019 with unlimited authorized common shares. On Jan 2, 2019, MFP issued and sold 60000 common shares for S4 each. Also on Jan 2, 2019, MFP issued and sold 8000, $2 noncumulative preferred shares for 510 each. MFP issued and sold another 10000 common shares on Sept 1, 2019 for $5 each. Profit for 2019 was zero; the company broke even and decided it would not be prudent to declare dividends.

2020 was a much better year. Year-end (December 31) showed $100000 profit (the profit is currently in "income summary*, so include the closing entry in your answer). On Dec 31, 2020, MFP declared a $60000 cash dividend payable on January 31, 2021 to shareholders of record on January 20

Required -

a) Prepare all necessary journal entries for the above transactions, from Jan 2, 2019 to Jan 31, 2021.

b) How would the dividend have been allocated if the preferred shares were cumulative instead of noncumulative?

Reference no: EM133140579

Questions Cloud

Developing a Stakeholder Analysis : A Stakeholder Analysis is a useful way to identify the people who need to know about the change and their likely concerns

What is the disadvantage of using the payback period : What is the disadvantage of using the payback period approach to investment appraisal? (That is, in what way might it lead to poor decision-making?)

Did this repurchase increase or decrease starbucks roe : Starbucks repurchased over $1.4 billion of its common stock in 2015. Did this repurchase increase or decrease Starbucks' ROE

Determine balance of account payable on bee budgeted balance : Purchases for the fourth quarter of 2022 were $50,000. Determine the balance of accounts payable on Bee's budgeted balance sheet at December 31, 2022

How would the dividend have been allocated : On Jan 2, 2019, MFP issued and sold 60000 common shares for S4 each. How would the dividend have been allocated

Prepare statement of financial position as at december : Provide for depreciation: Motor vehicle- 25% of cost and Office equipment- 20% of cost. Prepare Statement of Financial Position as at 31 December 2019

Calculate the bcr and roi of each training program : As the housing market began to heat up, the Renswartz Realty Company set high goals for increasing the number of listings and sales. In order to accomplish thes

Explain the linkages between competitive strategies and hr : 1) Explain the linkages between competitive strategies and HR 2) Describe how firms evaluate their strategies and HR implementation

Record the necessary entries in the journal entry : Interest is payable at maturity. FirstBanc Corporation's year-end is December 31. Record the necessary entries in the Journal Entry Worksheet

User Account

All Pages

How would the dividend have been allocated

Reference no: EM133140579

Reference no: EM133140579

Questions Cloud

Reviews

Write a Review

Accounting Basics Questions & Answers

Record sales and collections on account

Find what is the depreciation charged

Book value is computed

Brand attitudes change overtime

What is the type of fraud being investigated

What is the expected profit if jean and jill decide

Reed company uses a standard costing system manufacturing

The worst case and best case npv?

Maserati corporation purchased a new machine for its

An acquaintance with an interest in investing says i would

What is its approximate internal rate of return

Examine main reasons service companies are more sensitive

Assured A++ Grade

Academics

Major Subjects

Majors

Get In Touch

TERMS & POLICIES

HELP & SUPPORT