Answered Essay: The books of Pearl Corporation carried the following account balances as of December 31, 2017. Cash 206,000 Preferred Stock (6% cumulative, nonparticipating, $5

Problem 15-7 The books of Pearl Corporation carried the following account balances as of December 31, 2017. Cash Preferred Stock (6% cumulative, nonparticipating, $50 par) 282,000 Common Stock (no-par value, 328,000 shares issued) Paid-in Capital in Excess of Par-Preferred Stock Treasury Stock (common 2,900 shares at cost) Retained Earnings 206,000 1,640,000 141,000 30,800 108,400 The company decided not to pay any dividends in 2017 The board of directors, at their annual meeting on December 21, 2018, declared the following: The current year dividends shall be 6% on the preferred and $0.50 per share on the common. The dividends in arrears shall be paid by issuing 1,410 shares of treasury stock. At the date of declaration, the preferred is selling at $74 per share, and the common at $12 per share. Net income for 2018 is estimated at $77,300 (a) Prepare the journal entries required for the dividend declaration and payment, assuming that they occur simultaneously. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select No Entry for the account titles and enter 0 for the amounts. Round answers to o decimal places, e.g. 3,487.) Account Titles and Explanation Debit Credit For preferred current year dividend: (b) Could Pearl Corporation give the preferred stockholders 2 years dividends and common stockholders a 50 cents per share dividend, al n cash?

The books of Pearl Corporation carried the following account balances as of December 31, 2017. Cash 206,000 Preferred Stock (6% cumulative, nonparticipating, $50 par) 282,000 Common Stock (no-par value, 328,000 shares issued) 1,640,000 Paid-in Capital in Excess of Par-Preferred Stock 141,000 Treasury Stock (common 2,900 shares at cost) 30,800 Retained Earnings 108,400 The company decided not to pay any dividends in 2017. The board of directors, at their annual meeting on December 21, 2018, declared the following: “The current year dividends shall be 6% on the preferred and $0.50 per share on the common. The dividends in arrears shall be paid by issuing 1,410 shares of treasury stock.” At the date of declaration, the preferred is selling at $74 per share, and the common at $12 per share. Net income for 2018 is estimated at $77,300. (a) Prepare the journal entries required for the dividend declaration and payment, assuming that they occur simultaneously. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select “No Entry” for the account titles and enter 0 for the amounts. Round answers to o decimal places, e.g. 3,487.) (b) Could Pearl Corporation give the preferred stockholders 2 years’ dividends and common stockholders a 50 cents per share dividend, al n cash?

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