Pearland Company Has 50,000 Shares of Common Stock Outstanding and 2,000

question 69

Essay

Pearland Company has 50,000 shares of common stock outstanding and 2,000 shares of preferred stock outstanding. The common stock is $1.00 par value. The preferred stock has a $100 par value, a 5% dividend rate, and is non-cumulative. On October 31, 2013, the company declares dividends of $0.25 per share for common stock and $5.00 per share for preferred stock. Please provide the journal entry for the declaration of dividends.

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Definitions:

Forward Rate

The agreed-upon price for a financial transaction to be executed at a future date, used particularly in currency and interest rate markets.

2-year Bond

A debt security that matures in two years and typically offers periodic interest payments.

Stripped Treasuries

Securities derived from U.S. Treasury bonds by separating the coupons from the principal, allowing them to be sold separately as zero-coupon bonds.

Pure Yield Curve

A theoretical representation of the rates of interest for zero-coupon bonds across different maturities under the assumption of no risk.