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Rina8888 [55]
3 years ago
14

Encore Inc. declared an $80,000 cash dividend. It currently has 3,000 shares of 7%, $100 par value cumulative preferred stock ou

tstanding. It is one year in arrears on its preferred stock. How much cash dividends will Encore distribute to the common stockholders?
Business
1 answer:
blsea [12.9K]3 years ago
3 0

Answer:

$38,000

Explanation:

Before distributing dividends to common stockholders, Encore must first deal with the preferred stockholders.

preferred stock annual payment = 3,000 shares x 7% x $100 = $21,000

Since the company owes one year's payment to preferred stockholders, it must pay them two years now = $21,000 x 2 = $42,000

So Encore will have $38,000 (= $80,000 - $42,000) left to distribute to commons stockholders.

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2 years ago
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3 years ago
Zen Arcade paid the weekly payroll on January 2 by debiting Salaries and Wages Expense for $47,000. The accountant preparing the
hram777 [196]

Answer:

Salaries and wages payable...................Dr                    $20,000

                                      Salaries and wages expense                  $20,000

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As per accrual system, an expense is incurred when it is accrued irrespective of when it is paid. So, $20,000 was accrued in December 31, salary and wages expenses would have been debited then amounting to $20,000.

In order to rectify the mistake of double counting, the entry passed by the accountant would be reversed to nullify the effect.

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Salaries and wages payable               $20,000

                 Salaries and wages expense                    $20,000

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