ACC 400 Course Great Wisdom / tutorialrank.com ACC 400 Course Great Wisdom / tutorialrank.com | Page 15

d.

Retained Earnings

Dividends Payable

17.
Allstate, Inc., has 10,000 shares of 6%, $100 par value,
cumulative preferred stock and 100,000 shares of $1 par value
common stock outstanding at December 31, 2007. If the board of
directors declares a $50,000 dividend, the

a.
preferred stockholders will receive 1/10th of what the
common stockholders will receive.

b.

preferred stockholders will receive the entire $50,000.

c.
$50,000 will be held as restricted retained earnings and
paid out at some future date.

d.
preferred stockholders will receive $25,000 and the
common stockholders will receive $25,000.

18.

When a change in accounting principle occurs

a.
prior years' financial statements should not be changed
to reflect the newly adopted principle.