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ACC - Three Problems Set




Question;Question 1:Marsh Corporation issued 461,600 $1.6 cumulative preferred shares. In its first year of operations, it paid $636,560 of dividends to its preferred shareholders. In its second year, the company paid dividends of $738,560 to its preferred shareholders.a)What is the total annual preferred dividend supposed to be for the preferred shareholders?b)Calculate any dividends in arrears in years 1 and 2.Question 2:Laine Inc. is considering one of the three following courses of action: (1) paying a $0.40 cash dividend, (2) distributing a 6% stock dividend, or (3) effecting a 2 for 1 stock split. The current share price is $13 per share.Help Laine make its decision by completing the following chart (treat each possibility independently):Question 3:Sandhu Travel Agency Ltd. has 431,000 common shares authorized and 138,000 shares issued on December 31, 2014. On January 2, 2015, Kang Inc. purchased shares of Sandhu Travel Agency for $40 per share. Kang intends to hold these shares as a long term investment.Kang?s accountant prepared a trial balance as at December 31, 2015, under the assumption that Kang could not exercise significant influence over Sandhu Travel Agency. Under this assumption, the trial balance included the following accounts and amounts related to the Sandhu investment:Long-term investment: $1,460,040Dividend revenue: $126,960Unrealized gain on long-term investment: $190,440How many shares of Sandhu Travel Agency did Kang purchased on January 2? ="p15">="p0">="p0">


Paper#39585 | Written in 18-Jul-2015

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