Question

1. Prepare the journal entry to record Tamas Company's issuance of 6,800 shares of $100 par value, 8% cumulative preferred stock for $103 cash per share. 2. Assuming the facts in part 1. If Tamas declares a year-end cash dividend, what is the amount of dividend paid to preferred shareholders? (Assume no dividends in arrears.) Complete this question by entering your answers in the tabs below. Required 1 Required 2 Assuming the facts in part 1, if Tamas declares a year-end cash dividend, what is the amount of dividend paid to preferred shareholders? (Assume no dividends in arrears.) Dividend perNumber of Preferred Preferred Par Value per Preferred Share $ 680,000 Preferred Dividend Dividend Rate 8.0% Share Shares 5 54,400.00 5,454,400 < Required 1 < Prev 22 of 39 Next >

Answer 1

Solution:

Requirement 1:

Sl No.	Description	Debit	Credit
a	Cash ( 6800 Shares * $103 )	$ 700,400
	Preferred Stock ( 8 % Cumulative ) ( 6800 Shares * $100 )		$ 680,000
	Paid-In-Capital in Excess of Par-Preferred Stock		$    20,400
	(Being Preferred Stock Issued)

Requirement 2:

Par Value per Preferred Share	Dividend Rate	Dividend per Preferred Share	Number of Preferred Shares	Preferred Dividend
$              100.00	8%	$               8.00	6,800.00	$ 54,400.00

Preferred Dividend = 6800 Shares * $ 8 = $ 54,400