PREFERENCE SHARES CALCULATIONS

NAME: Aleena Mubashir Std Id: 20201-28203

SUBJECT: Intermediate financial accounting

SECTION ID: PM 10687

COURSE CODE: ACC 101

MCQ#1 Which of the following has no right to vote in the election of the board of directors of a company?

a) Common shareholders
b) Preferred shareholders
c) None
d) Both

MCQ#2 the owner of preferred stock

a) is entitled to a distribution of income prior to the common shareholders

b) has the right to veto the outcome of an election held by the common shareholders
c) has the right to declare the company bankrupt whenever there are insufficient funds to
pay dividends to the common shareholders
d) receives tax free dividends if they are an individual and own more than 20% of the
outstanding preferred shares
e) has the right to collect payment on any unpaid dividends as long as the stock is
noncumulative preferred

MCQ#3 Which of the following have fixed dividends?

a) Preferred shares
b) Common shares
c) None
d) Both

MCQ#4) The amount provided by shareholders against shares is called

a) Ampituted share
b) Paid in capital
c) Contributed capital
d) Stockholder’s equity

MCQ#5) Shares are subjected to:

a) Double taxation
b) Dividend in arrears
c) Retained earnings
d) None of the above
MCQ# 6) ABC company has Cash $304000 and preferred stock 2470000, the additional paid in will
be

a) $570,000
b) $290,000
c) $110,000
d) None of the above

MCQ #7) Asim corporation issued 6% preferred shares for Rs. 1000,000. The preferred shares are
issued for Rs.200 each. The number of shares would be:

a) 1000 shares
b) 2000 shares
c) 3000 shares
d) 5000 shares

MCQ #8) The 6%prefered shares authorized were 20,000 out of which 15,000 were issued for
Rs.75 each the par value per share was Rs.60. The necesaary entries will be

a) Cash dr 80,000 capital stock cr 600,000 additional paid in cr 200,000

b) Cash dr 112500 preferred stock cr 900,000 additional paid in cr 22500
c) Cash dr 112500 preferred stock 112500cr
d) Cash dr 112500 preferred stock cr 900,000 additional paid in cr 200,000

MCQ #9) 6% cumulative preferred stock, 20,000 shares authorized, 15000 shares issued at Rs 75,
par value Rs.60. what will be the total amount of dividend that is supposed to be provided to the
preferred shareholders?

a) Rs.60,000
b) Rs.80,000
c) Rs.54000
d) Rs.10,000

MCQ#10) What is the legal capital?

8% preferred stock, $100 par value, 200,000 shares $12,000,000

authorized
Common stock, $5 par value, 5,000,000 shares 14,000,000
authorized
a) 26,000,000
b) 20,000,000
c) 17,000,000
d) None of the above

MCQ#11) 7% cumulative preferred stock, $100 par value, 100,000 shares authorized. What is the
total amount of annual dividends paid to preferred stockholders?

a) $105000
b) 100,000
c) 200,000
d) 99,000
MCQ #12) Preferred stock,12% noncumulative , $100 par,8000 shares authorized and issued.
Preferred stock, 9% cumulative, $50 par, 40,000 shares authorized and issued. What are the
dividends paid to each class?

a. Non-cumulative 12, cumulative 13.5

b. non-cumulative 13.5, cumulative 12
c. non-cumulative 14, cumulative 15
d. non-cumulative 15, cumulative 14

MCQ #13) The value of preferred stock is $900 and the required reutrn is 30%then the preferred
dividend will be

a. 270
b. 27000
c. 90
d. 900

MCQ #14) Bill barnes organized a corporation called Barnes communication, Inc. The
corporation was authorized to issue 50,000 shares of $100 par value 10% cumulative preferred
stock. The first annual dividend of $10 per share was declared on the preferred stock to be paid
on December 20, choose the correct necessary entries:

a. Dividends dr 25000 dividends payable cr 25000

b. Dividends dr 25000 Cash cr 25000
c. Cash dr 25000 dividends dr 25000
d. None of the above

MCQ #15) 8% preferred stock, 100,000 shares authorized, 10,000 shares issued at $100 par value.
What will be the cash?

a. $1000,000
b. $100,000
c. $10,000
d. $1000

MCQ #16) Preferred stock 9% stock, $50 par value, 40,000 shares authorized, total paid in capital
$4,800,000. What is the average issuance price?

a. $170
b. $100
c. $200
d. $150

MCQ #17) 6% Preferred stock authorized and issued 50,000, par value Rs.20 issued price 25.
Common stock, 2000,000 shares authorized and 150,000 shares issued, par value Rs.50. Compute
the legal capital.

a. 8,500,000
b. 8500,000
c. 850,000
d. 1000,000
MCQ #18) 6% Preferred stock authorized and issued 50,000, par value Rs.20 issued price 25.
Common stock, 2000,000 shares authorized and 150,000 shares issued, par value Rs.50. compute
the total additional paid in:

a. $1000,000
b. 8,500,000
c. 850,000
d. 8500,000

MCQ #19) 7% cumulative preferred stock, $100 par value cash $15,000,000. If the dividend is not
paid for 3 years what total amount of dividend will have to be paid in the 4 th year? Compute and
choose the correct option:

a. $420,0000
b. $420,000
c. $42000
d. $4200

MCQ #20) 7% cumulative preferred stock, par value Rs.65 80,000 shares authorized 60,000 shares
issued at Rs.50 each and issued for Rs. 60. Compute and choose the additional paid in of
preferred shares

a. Rs.3900000
b. 390000
c. 39000
d. None of the above