Reference no: EM132820899

Question - On January 1, 2014, the following information appears in the records of Boultin Holdings Inc.: Authorized shares: Unlimited number of common shares; 1,000,000 $0.50 preferred cumulative shares Retained earnings balance $485,000 Accumulated other comprehensive income $110,000 Common shares 120,000 issued; total cost $390,000 Preferred shares 10,000 issued; total cost $100,000 During the year, the company had the following transactions:

-Mar 31 Declared cash dividends on common shares of $0.50 per share; payable to shareholders of record on April 10, and payable on April 25.

-Jun 30 Declared the entire annual dividend required on preferred shares; payable to shareholders of record on July 15, and payable on July 31.

-Sep 15 Declared a 10% stock dividend to shareholders of record on October 5, and distributable on October 15. The market price of the common share is $10.50All dividends were paid or distributed on the due date.

Journalize the dividend transactions.

Kis Co. declared $50,000 in dividends in 2001. Share capital consists of 3,000, no par common shares and 4,000, $2, no par preferred shares. Dividends have not been paid on the preferred shares since 1999. Determine the dividends to be paid on each class of shares assuming:

(a) the preferred shares are cumulative.

(b) the preferred shares are non-cumulative.

1. Give two reasons why a corporation would issue share dividends instead of cash dividends.

2. Companies frequently issue both preferred shares and common shares. What are the major differences in the rights of shareholders between these two classes of shares?