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Exercise 20.2 and 20.8Exercise 20.2 and 20.8

Exercise 20.2

International Grocer Corporation has outstanding 40,000 shares of noncumulative, 10 percent, $100 par-value preferred stock and 125,000 shares of no-par-value common stock.

During 2006 the corporation paid dividends of $360,000. What amount will be paid on each share of preferred stock? What amount will be paid on each share of

common stock?

Dividend requirement for preferred stock = $400,000(40,000 shares x 100 par value x 10%)

Dividends paid = $360,000$360,000/40,000 shares = $9.00 per preferred share

Common shareholders will receive nothing

During 2007 the corporation paid dividends of $925,000. How much will be paid on each share of preferred stock? How much will be paid on each share of common stock?

Dividend requirement for preferred stock = 400,000$400,000/40,000 shares = $10.00 per preferred share

Dividend on common stock:Total dividends paid = $925,000Preferred dividend requirement = 400,000Total dividend on common stock = $525,000

$525,000/125,000 shares = $4.20 per common share

Exercise 20.8

Kim Corporation issued 500 shares of its $5 par-value common stock for cash at $13 a share. Give the entry in general journal form to record the issuance of the stock.

Journal entry:

Cash 6,500 Common stock (500 shares) 2,500 Paid-in capital in excess of par

value – common stock 4,000Issuance of 500 shares of $5 par common stock at $13 per share