Question: 1. Frey & Felder (F&F) brands touch the lives of people around the world in 180 countries and territories. The F&F community consists of nearly 188,800 employees. In 2014, the company had 10 billion shares of common stock authorized, 4 billion shares issued, and 3 billion shares outstanding. Par value is $1 per share. F&F has been paying a dividend for over 120 years and 2014 marks the 58th consecutive year that the Company has increased its dividend.
Required: Assume that F&F declared a dividend of $2.53 per share on October 1, 2014, to stockholders of record on October 15. F&F paid the dividend on October 20. Prepare journal entries as appropriate for each date.
2. The records of Hollywood Company reflected the following balances in the stockholders' equity accounts at the end of the current year:
Common stock, $12 par value, 47,000 shares outstanding
Preferred stock, 10 percent, $10 par value, 6,000 shares outstanding
Retained earnings, $225,000
On September 1 of the current year, the board of directors was considering the distribution of an $72,000 cash dividend. No dividends were paid during the previous two years. You have been asked to determine dividend amounts under two independent assumptions (show computations):
a. The preferred stock is noncumulative.
b. The preferred stock is cumulative.
Required: 1. Determine the total and per share amounts that would be paid to the common stockholders and the preferred stockholders under the two independent assumptions.