Question

24. Melvern's Corporation has an investment in Wallace Company common stoel ment in 20,000 shares of vidend to stockholders ompany common stock with a cost of $872,000. 1 nese shares are used in a property dividend to of Melvern's. The property dividend and scheduled to be distributed on July s. The property dividend is declared on May 25 cheduled to be distributed on July 31 to stockholders record on June 15. The fair value per share of Walla is $63 on May 25, $66 on June 15, and $68 on July 3 effect of this property dividend on retained earnings is reduction of 15. The fair valun July 31 to stockholders of Share of Wallace stock , and $68 on July 31. The net A) $1,360,000. B) $1,320,000. C) $1,260,000. D) $ 872,000. 25. Written, Inc. has outstanding 600,000 shares of $2 par common stock and 120,000 shares of no-par 6% preferred stock with a stated value of $5. The preferred stock is cumulative and participating. Dividends have been paid in every year except the past two years and the current year. Assuming that $270,000 will be distributed, how much will the common stockholders receive? A) $162,000. B) $132,000. C) $138,000. D) $ 72,000.

Answer 1

24) Property Dividend is declared on 25th May hence net effect on this property dividend on retained earning is reduction of $1260000 i.e.option (C)

25)

Particulars	Amount
Amount for Distribution	$270000
Less : Amount Paid for Preferred Stock	$108000
(120000*5*6%)*3
Balance for Common Stock Holders	$162000

Hence option (A) is correct.