Exercise 14-2 Knudsen Corporation was organized on January 1, 2016. During its f

Question

Exercise 14-2 Knudsen Corporation was organized on January 1, 2016. During its first year, the corporation issued 2,000 shares of $50 par value preferred stock and 108,000 shares of $10 par value common stock. At December 31, the company dedared the following cash dividends: 2016, $5,700: 2017, $14,400; and 2018, $27,000. Show the allocation of dividends to each dass of stock, assuming the preferred stock dividend is 7% and noncumulative. 2016 2017 2018 Allocation to preferred stock Allcation to common stock SHOW LEST OF ACCOUNTS Show the allocation of dividends to each class of stock, assuming the preferred stock dividend is 9% and cumulative. 2016 2017 2018 Allcation to preferred stock Allocation to common stock

Explanation / Answer

a) Allocation of dividend :

Preferred dividend = 2000*50*7% = 7000

b) Allocation of dividend :

Preferred dividend = 2000*50*9% = 9000

Journal entry :

2016 2017 2018 Allocation to preferred stock 5700 7000 7000 Allocation to common stock 0 7400 20000

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