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Veseljchak [2.6K]
3 years ago
8

The shareholders’ equity of Tru Corporation includes $540,000 of $1 par common stock and $1,140,000 par of 7% cumulative preferr

ed stock. The board of directors of Tru declared cash dividends of $144,000 in 2018 after paying $54,000 cash dividends in each of 2017 and 2016.
What is the amount of dividends common shareholders will receive in 2018?
Business
1 answer:
Dmitry_Shevchenko [17]3 years ago
7 0

Answer:

$12,600

Explanation:

Annual Dividend to preferred stock = $1,140,000 × 7%

                                                           =  $79,800

A schedule of preferred stock dividend in Arrears is as follows :

               Dividend              Paid                Arrears

2016        $79,800           $54,000           $25,800

2017        $79,800           $54,000           $51,600

2018        $79,800           $131,400                 0

Dividends of $131,400 has to be paid in 2018 to cover all the arrears.

Principle : Preference dividends (and their arrears if cumulative) are paid first before dividends distribution to common stock holders.

Common Stock Holders receive the remaining amount of dividends of $12,600 ($144,000 - $131,400)

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The residual income for the Division A of Magnolia Company for an income from operations of $80,000 will be $32,000.

<h3>What is residual income?</h3>

Residual Income is the total of total income from operations less the minimum acceptable rate of return on the deployed assets for such operations over a financial period.

Using the above information, it can be ascertained that the residual income will be,

\rm Residual\ Income = Income\ from\ Operations - Rate\ of\ Return\ x\ Assets\\\rm Residual\ Income = 80000- (12\%\ x\ 400000)\\\\\rm Residual\ Income = \$32,000

Hence, the residual income will be as computed above.

Learn more about residual income here:

brainly.com/question/27330050

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8 0
2 years ago
A company that uses the allowance​ method, writesminusoff a receivable of $ 6 comma 000. Prior to the journal​ entry, the credit
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Answer:

The net realizable value of Accounts Receivable = 1,985,538

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The journal​ entry will be: Allowance for Uncollectible Accounts (Debit - Decreased) 6,000 and Accounts Receivable (Credit - Decreased) 6,000.

After the journal​ entry the credit balance in the Allowance for Uncollectible Accounts will be: 2,005,000 - 6000 = 1,999,000, and the debit balance in Allowance for Uncollectible Accounts will be: 19,462 - 6,000 = 13,462.

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3 0
3 years ago
Bogart Company is considering two alternatives. Alternative A will have revenues of $146,100 and costs of $104,400. Alternative
irinina [24]

Answer:

Choosing alternative B would increase net income by $17,100

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The analysis showing the incremental revenues,costs and net income of alternative A and B is shown below:

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Revenues        $146,100            $185,900           $39800

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Alternative B records a higher net income compared to Alternative A,hence choosing alternative B would increase net income by $17,100

r

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3 years ago
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