Question

Netpass Company has 300,000 shares of common stock authorized, 270,000 shares issued, and 100,000 shares of treasury stock. The company's board of directors declares a dividend of $1 per share of common stock. What is the total amount of the dividend that will be paid? Dividend Amount to be Paid $ 77.000

Answer 1

Answer

Dividend payable = Number of Shares outstanding * Dividend per   share

_{Number of Shares Outstanding = No of Shares issued - Treasury Stock}

_{= 270,000 - 100,000}

_{= 170,000}

_{Dividend payable = 170,000*$1}

_=$170,000

_{NOTE : SINCE SHARES OWNED BY COMPANY ISSUING ITSELF ARE CALLED REASURY STOCK AND IT DOESN'T MAKE ANY SENSE IN PAYING DIVIDENDS TO ITSELF. SO DIVIDEND IS NOT PAYABLE ON TREASURY STOCK}