Martinez Company ‟ s ledger shows the following balances on December 31 , 2012 .
5 % Preferred stock- $ 10 par value , outstanding 22,480 shares $ 224,800
Common stock- $ 100 par value , outstanding 33,720 shares 3,372,000 Retained earnings 708,120
Assuming that the directors decide to declare total dividends in the amount of $ 298,984 , determine how much each class of stock should receive under each of the conditions stated below . One year ‟ s dividends are in arrears on the preferred stock .
Question 6
On January 1 , 2012 , Barwood Corporation granted 5,040 options to executives . Each option entitles the holder to purchase one share of Barwood ‟ s $ 5 par value common stock at $ 50 per share at any time during the next 5 years . The market price of the stock is $ 72 per share on the date of grant . The fair value of the options at the grant date is $ 154,000 . The period of benefit is 2 years . Prepare Barwood ‟ s journal entries for January 1 , 2012 , and December 31 , 2012 and 2013 .
Question 7
Rockland Corporation earned net income of $ 340,800 in 2012 and had 100,000 shares of common stock outstanding throughout the year . Also outstanding all year was $ 908,800 of 10 % bonds , which are convertible into 18,176 shares of common . Rockland ‟ s tax rate is 40 percent . Compute Rockland ‟ s 2012 diluted earnings per share .
Question 8
DiCenta Corporation reported net income of $ 250,000 in 2012 and had 50,000 shares of common stock outstanding throughout the year . Also outstanding all year were 5,410 shares of cumulative preferred stock , each convertible into 2 shares of common . The preferred stock