The following is the shareholders’ equity section of Suozzi Corp. at December 31, 2012:

 Preferred shares, a authorized 100,000 shares; issued 25,000 shares …………      $ 750,000

Common shares (200,000 authorized, 60,000 issued) ………………………..          1,800,000

Contributed surplus …………………………………………………………..          1,150,000

Total paid-in capital ………………………………………………………….           3,700,000

Retained earnings …………………………………………………………….          2,470,500

Total shareholders’ equity ……………………………………………………           $6,170,500

^a The preferred shares have a $5 dividend rate, are cumulative, and participate in distributions in excess of a $3 dividend on the common shares.

Instructions

 (a). No dividends were paid in 2010 or 2011. On December 31, 2012, Suozzi wants to pay a cash dividend of $4 a share to common shareholders. How much cash would be needed for the total amount to be paid to preferred and common shareholders?

(b). The company instead decides that it will declare a 15% stock dividend on the outstanding common shares. The shares’ market value is $105 per share. Prepare the entry on the date of declaration.

(c). The company decides instead to acquire and cancel 10,500 common shares. The current market value is $105 per share. Prepare the entry to record the retirement, assuming contributed surplus arose from previous cancellations of common shares.