A corporation has issued 30,000 shares of $50 par common stock and holds 5,000 of these shares as treasury stock. If the corporation declares a $1 per share cash dividend, what amount will be recorded as cash dividends?

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Business

Warner

26 June, 02:45

A corporation has issued 30,000 shares of $50 par common stock and holds 5,000 of these shares as treasury stock. If the corporation declares a $1 per share cash dividend, what amount will be recorded as cash dividends?

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Answers (1)

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Barr · Answer 1

The amount of $25,000 will be recorded as the Cash Dividends

Explanation:

The amount which is to be recorded as the cash dividend is computed as:

Cash Dividend = Number of Shares * Rate per share

where

Number of shares is computed as:

Number of shares = Issued Shares - Treasury Stock

= 30,000 - 5,000

= 25,000

NOTE: No dividend is paid on treasury stocks, so the the shares of the treasury stocks are subtracted.

Rate per share is $1

SO, Putting the values above:

Cash Dividend = 25,000 * $1

= $25,000