Samba Company Acquired 10,000 Shares of the Common Stock of Pati

question 39

Multiple Choice

Samba Company acquired 10,000 shares of the common stock of Pati Corp.in July 2014.The following January,Pati announced a $100,000 net income for 2014 and declared a cash dividend of $.50 per share on its 100,000 shares of outstanding common stock.The Samba Company dividend revenue from Pati Corp.in January 2014 would be

• A) $0.
• B) $2,500.
• C) $5,000.
• D) $10,000.

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Definitions:

Cumulative Preferred Stock

A type of preferred stock where dividends accumulate if not paid in a given year, requiring payment of missed dividends before common shareholders can receive dividends.

Common Stock

Equity securities that represent ownership in a company, usually accompanied by voting rights and potential for dividends.

Dividends

Money distributed from a company's profits to its owners or investors.

Stock Dividend

A dividend payment made in the form of additional shares rather than cash, often used by companies to conserve cash.