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Accounting | Accounting homework help

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As of December 31, 2011, Nibley Corporation has 300,000 shares of $10 par-value common stock authorized, with 200,000 of these shares issued and outstanding.
Required:
1. Prepare journal entries to record the following 2012 transactions:
Jan. 1 Received authorization for 150,000 shares of 7%, cumulative preferred stock with a par value of $25.
2 Issued 25,000 shares of the preferred stock at $35 per share.
June 1 Reacquired 30% of the common stock outstanding for $40 per share.
2 Declared a cash dividend of $65,000. The date of record is June 15.
30 Paid the previously declared cash dividend of $65,000.
2. Determine the proper allocation to preferred and common stockholders of a $150,000 cash dividend declared on December 31, 2012. (This dividend is in addition to the June 2 dividend.)
3. Interpretive Question: Why didn?t the preferred stockholders receive their current-dividend preference of $43,750 in part (2)?

Solution:

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