Outstanding Stock of the Core Corporation Included 20,000 Shares of $5

question 181

Multiple Choice

Outstanding stock of the Core Corporation included 20,000 shares of $5 par common stock and 10,000 shares of 6%, $10 par noncumulative preferred stock. In 2017, Core declared and paid dividends of $4,000. In 2018, Core declared and paid dividends of $12,000. How much of the 2018 dividend was distributed to preferred shareholders?

• A) $8,000
• B) $4,000
• C) $6,000
• D) None of these answers are correct

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Definitions:

Percentage-Of-Completion Method

An accounting method used to recognize revenue and expenses of long-term contracts proportionally to the amount of work completed.

Extractive Industry

Industries involved in the extraction of natural resources from the earth, such as mining, drilling for oil, or logging.

Allowance Method

A method of accounting for bad debts that involves estimating and recording the amount of uncollectible accounts receivable.

Direct Write-Off Method

An accounting method where uncollectible accounts receivable are directly written off against income at the time they are deemed non-recoverable.