Question 1 - The stockholders' equity accounts of Welk Company have the following balances on January 1, 2014:
Common Stock, $6 par $300,000
Additional Paid-in Capital in Excess of Par - Common Stock $540,000
Retained Earnings $492,000
The company has no treasury stock. On March 1, 2014, Welk declared and paid a $1.25 per share cash dividend.
On July 1, 2014, the company declared and paid a 7% stock dividend when its stock was selling at $9.75 per share.
On November 1, 2014, Welk declared a 3:1 stock split. Net income for 2014 was $280,000.
Required: Provide the following amounts to be reported on Welk's December 31, 2014, balance sheet.
Common Stock shares outstanding: _______________
Common Stock ($): ________________
Additional Paid-in Capital ($): ________________
Retained Earnings ($): ________________
Question 2 - The stockholders' equity section of Zelk Corp showed the following:
Preferred Stock, 6%, $100 par, 5,000 shares outstanding $500,000
Common Stock, $10 par, 60,000 shares outstanding $600,000
Additional Paid-in Capital in Excess of Par $200,000
Retained Earnings $118,000
Zelk's preferred stock is cumulative and participating. The company decides to distribute all of its retained earnings and declares a cash dividend of $118,000. Preferred dividends are 1 year in arrears.
Required: Determine how much of the dividend will be paid to the preferred and common stockholders.
Preferred Stockholders: _______________
Common Stockholders: ________________