Questions -
Q1) Orleans Company was incorporated on January 1, 2012. Orleans issued 4,000 shares of common stock and 500 shares of preferred stock on that date. The preferred shares are cumulative, $100 par, with an 8% dividend rate. Orleans has not paid any dividends yet. In 2015, Orleans had its first profitable year, and on November 1, 2015, Orleans declared a total dividend of $28,000. What is the total amount that will be paid out to common shareholders?
$4,000
$16,000
$12,000
$28,000
Q2) Which of the following characteristics is an advantage of the corporate form of business?
Higher degree of government regulation
The potential to raise large amounts of capital
Separation of ownership and management
Double taxation
Q3) A company had $80,000 of Sales revenue and $75,000 of Expenses. Which of the following would be the first of three year-end closing entries?
Debit Retained earnings $5,000 and credit Income summary $5,000.
Debit Expenses $75,000 and credit Income summary $75,000.
Debit Income summary $5,000 and credit Retained earnings $5,000.
Debit Revenues $80,000 and credit Income summary $80,000.
Q4) A corporation has 15,000 shares of 10%, $50 par cumulative preferred stock outstanding and 25,000 shares of no-par common stock outstanding. Dividends of $37,500 are in arrears. At the end of the current year, the corporation declares a dividend of $120,000.
How is the dividend allocated between preferred and common shareholders?
The dividend is allocated $7,500 to preferred shareholders and $112,500 to common shareholders.
The dividend is allocated $112,500 to preferred shareholders and $7,500 to common shareholders.
The dividend is allocated $120,000 to preferred shareholders and $0 to common shareholders.
The dividend is allocated $75,000 to preferred shareholders and $45,000 to common shareholders.