Section 2...Equity

Question 1

Liquidating Dividends

Answer 1

Paid out of P-I-C

Question 2

Retained Earnings

Answer 2

Remember: ONLY Net Income and Dividend Declaration and Payments affect R.E.

Question 3

Par Method for T/S

Answer 3

Dr T/S
Dr PIC (# of shares x’s PIC%)
Dr R.E. (# of shares x (reacq price x’s orig par + orig pic price))
Cr Cash

Question 4

Allocation of Preferred to Common

Answer 4

P/S in noncumulative and nonparticipating
Page 283 of FAR Surgent book, bro.