SOLVED

13.4Â Â Learning Objective 4 1) When does a company record dividends payable? A) On date of record. B) On ex-dividend date. C) On payment date. D) On declaration date. 2) What is the “ex-dividend” date for the Toronto Stock Exchange? A) 2 business days after the declaration date. B) 2 business days after the date of record. C) 2 business days before the date of record. D) 2 business days before the declaration date. 3) Which statement about the “ex-dividend date” is correct? A) The ex-dividend date relates only to shares that are publicly traded. B) An investor who buys shares before the ex-dividend date does not have the right to receive a dividend that has been declared. C) The ex-dividend date will occur after the record date. D) An investor who buys shares on or after the ex-dividend date has the right to receive a dividend that has been declared. 4) Which statement about cash dividends is correct? A) The date of declaration is the date that determines which shareholders will receive the dividends. B) The date of declaration is the date on which the Board of Directors declares a dividend and the company has an obligation to pay the dividend. C) The date of record is the date when the funds for the dividend are transferred to shareholders. D) The company must record a journal entry on the date of declaration, the date of record and the date of payment. 5) Which statement about “stock dividends” is correct? A) Only a memo entry is needed for this transaction. B) No entry is needed in the accounting records. C) A journal entry is needed for this transaction. D) This is the same as a stock split for accounting purposes. 6) Milton Corporation declared and distributed a 8% stock dividend. Milton had 440,000 common shares outstanding and 940,000 common shares authorized before the stock dividend. The board of directors determined the appropriate market value per share as $10. Required: How much should be recorded for the stock dividend? Record the journal entry (if any) for the shares 7) Nala Company has two classes of shares that were both issued on January 1, 2015: Class A, $10 par value, 8% preferred shares, 2,750,000 shares issued and outstanding; Class B, no par value common shares issued at $30/share, 1,300,000 shares issued and outstanding. Due to challenging start-up problems in 2015 and 2016 there were no dividends paid; in 2017 dividends of $8,000,000 were paid; and, for 2018, dividends paid totaled $16,000,000. Required: How much was the amount of dividends paid to preferred and common shares in 2015 to 2018? First assume that the preferred shares are non-cumulative, then assume that they are cumulative. NC = Non-cumulative C = Cumulative P/S = Preferred shares C/S = Common shares 2015 2016 2017 2018 NC, P/S C/S Total Dividends C, P/S C/S Total Dividends