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1. Prepare the journal entry to record Tamas Company’s issuance of 6,300 shares of $100 par value, 7% 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.)

Respuesta :

Answer:

2. $44,100

Explanation:

1. The Journal entry is as follows:

Cash (6,300 × $103) A/c             Dr. $648,900

To Preferred Stock (6,300 × $100)                    $630,000                            

To APIC - Preferred Stock (6,300 × $3)            $18,900

(Record issuance of Preferred Stock)

2. Preferred dividend:

= Dividend per preferred share × Number of preferred shares

= ($100 × 7%) × 6,300

= $7 × 6,300

= $44,100

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