The Following Information Is Provided for Bold Company for the Year

question 120

Multiple Choice

The following information is provided for Bold Company for the year 2019: • Preferred stock,6%,$50 par value,1,000 shares issued and outstanding
• Common stock,$100 par value,2,000 shares issued and outstanding
• Dividends in arrears for three prior years (2016-2018)
• Total dividends declared and paid in 2019 were $50,000.
-
Assuming the preferred stock is noncumulative,what amount of the 2019 dividend declaration for the amount of dividends in arrears was recorded with a credit to the Dividends payable account on the date of declaration?

• A)$12,000.
• B)$3,000.
• C)$0.
• D)$50,000.

---

Definitions:

Investment

The allocation of resources, usually money, into assets with the expectation of generating income or profit in the future.

Entire Wealth

The total value of all assets owned by an individual or entity, minus any debts.

Intertemporal Budget Constraint

A concept that describes the trade-offs between current and future consumption, considering the effects of present decisions on future financial standing.

Present Value

The current worth of a future sum of money or stream of cash flows, given a specific rate of return.