Question

Hillel Company was established on Jan 1st 2014 by issuing 4,000 preferred stock ($150 par, 10%, cumulative, non-participating) for $600,000 and additional common stocks ($4 par value) for $4,000,000. The Additional Paid in Capital (APIC) related to the common stocks was $3,200,000. On Dec 31st 2015 the company declares for the first time a dividend in the amount of $2,320,000. 13. Which dividend amount will be distributed to a person holding 1,500 common shares? a. $22,000 b. $17,400 c. $18,000 d. $16,500 e. $21,250 2.od tout periton holding 1 shoes 14. Assuming that on Jan 1st 2015 Hillel Company bought 20% out of its common stocks (shares buyback). What would be the dividend distributed to a person holding 1,500 common shares? a. $22,400 b. $12,450 c. $21,500 d. $24,250 e. $20,625

No handwritten work

Answer 1

Answer-13:

Option b is the correct answer.

Explanation:

Additional common stock value Less: Additional paid in capital(AIPC) $ 4,000,000 $ 3,200,000 Par value of share 800,000 Total number of shares = (800,000 / $4) Total amount of dividend declared Dividend per share ($2,320,000 / 200,000) 200,000 $ 2,320,000 11.60 Dividend for 1,500 shares ($11.60 * 1,500) 17,400

Answer-14:

$ 4,000,000 $ 3,200,000 Additional common stock value Less: Additional paid in capital(AIPC) Par value of share 800,000 Total number of shares = (800,000 / $4) Less: Number of shares brought back (200,000*20%) Balance number of shares Total amount of dividend declared Dividend per share ($2,320,000 / 160,000) 200,000 40,000 160,000 $ 2,320,000 14.50 Dividend for 1,500 shares ($14.50 * 1,500) 21,750