Stars, Inc

question 64

Multiple Choice

Stars, Inc. has declared a $22,000 cash dividend to shareholders. The company has 3,000 shares of $14-par, 9% preferred stock and 12,000 shares of $20-par common stock. The preferred stock is cumulative. How much will be distributed to the preferred and common stockholders on the date of payment if the preferred stock is $8,000 in arrears?

• A)$11,780 preferred, $10,220 common
• B)$8,000 preferred, $14,000 common
• C)$3,780 preferred, $18,220 common
• D)$22,000 preferred, $0 common

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Definitions:

Loss of $1,000

A financial term indicating that an entity has incurred a negative financial result, specifically being $1,000 less than initially accounted for or expected.

Impairment Loss

A reduction in the book value of an asset when its fair market value falls below its carrying amount on the balance sheet, indicating a permanent decline in value.

Accumulated Depreciation

Represents the total depreciation expenses charged against a fixed asset since it was put into use, reflecting its decrease in value over time.

Accumulated Depreciation

The total amount of depreciation expense that has been recorded for an asset since it was put into use, reducing its book value.