Accounting question help (need explanation)

timer Asked: May 6th, 2015

Question description

The stockholders' equity section of the Blandings Co. balance sheet contains the following information:

4%, Preferred Stock, $100 par value, cumulative, 20,000 shares authorized and 5,000 shares issued

Common stock, $1 par value, 100,000 shares authorized and 20,000 issued and outstanding

The board of directors declares and pays the annual dividend on the preferred shares and a $2 per share dividend on the common share.  This will cause:


a. A decrease in cash of $60,000.

b. A decrease in cash of $280,000.

c. A decrease in stockholders’ equity of $280,000

d. An increase in stockholders’ equity of $60,000.

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