1. What is the primary purpose of a stock split?
2. Explain how shareholders can avoid earnings per share di- lution from common stock issuances?
3. What are the conditions for declaring and paying a cash dividend?
4. The dates associated with a cash dividend are October 1, November 15, and December 30. Identify each date.
5. A corporation with both cumulative preferred stock and common stock outstanding has a substantial credit balance in its retained earnings account at the beginning of the current fiscal year. Although net income for the current year is sufficient to pay the preferred dividend of
$100,000 each quarter and a common dividend of $300,000 each quarter, the board of directors declares dividends only on the preferred stock. Suggest possible reasons for passing the dividends on the common stock.