Use the information above to answer the following question.If the company pays the fixed dividend on the preferred stock,the transaction will:
A)decrease Preferred stock by $20,000.
B)decrease Retained earnings by $600,000.
C)decrease Cash by $20,000.
D)increase Liabilities by $20,000.

Question

Quizplus · Accepted Answer

Paying the fixed dividend on the preferred stock will decrease the company's cash balance by the amount of the dividend, in this case $20,000. This would not affect the preferred stock balance, retained earnings, or liabilities.

Use the Information Above to Answer the Following Question