Answer the following statements true (T) or false (F)
1. Cumulative common stock will pay dividends in arrears.
2. If a company has 2,500 shares authorized and 1,500 have been issued, the annual dividends on $20 par 5% preferred stock is $1,500.
3. If a company has 3,000 shares authorized and 2,000 have been issued, the annual dividends on $18 par 3% preferred stock is $1,620.
4. A stock dividend affects total Stockholders' Equity.
5. A stock dividend increases the stockholder's percent of stock held.
1. FALSE
2. TRUE
Explanation: outstanding shares × par value × preferred dividend rate; ex: 1,500 × $20 × 5% = 1500
3. FALSE
4. FALSE
5. FALSE
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