Problem 1: The charter of a corporation provides for the issuance of 100,000 shares of common stock. Assume that 40,000 shares were originally issued and 5,000 were subsequently reacquired. What is the amount of cash dividends to be paid if a $2 per share dividend is declared?
- $80,000
- $10,000
- $70,000
- $35,000
Problem 2: Day Inc. has 5,000 shares of 5%, $100 par value, cumulative preferred stock and 50,000 shares of $1 par value common stock outstanding at December 31, 2006. What is the annual dividend on the preferred stock?
- $50 per share
- $25,000 in total
- $600 in total
- $0.50 per share
Problem 3: A corporation purchases 10,000 shares of its own $10 par common stock for $25 per share, recording it at cost. What will be the effect on total stockholders' equity?
- increase, $100,000
- increase, $250,000
- decrease, $100,000
- decrease, $250,000