ation was organized on January 1, 2016. During its first year, the corporation i

Question

ation was organized on January 1, 2016. During its first year, the corporation issued 2,000 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 class of stock, assuming the preferred stock dividend is 7% and noncumulative. 2016 2017 2018 Allocation to preferred stock Allocation to common stock show the allocation of dividends to each class of stock, assuming the preferred stock dividend is 9% and cumulative. 2016 017 2018 Añocation to preferred stock Allocation to common stock ly indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) Date Account Titles and Explanation Debit Crediat to

Explanation / Answer

a) Preferred dividend @7%, non-cumulative : Year 2016 2017 2018 Total Dividend 5700 14400 27000 Allocation of pref stock dividend 2000*50*7%=7000 7000 7000 -1300 7400 20000 Allocation of common stock 0 7400 20000 Arrear 0 0 0 b) Preferred dividend @9%, cumulative : Year 2016 2017 2018 Total Dividend 5700 14400 27000 Arrear adjusted 3300 Allocation of pref stock dividend 2000*50*9%=9000 9000 9000 -3300 2100 18000 Allocation of common stock 0 2100 18000 Arrear -3300 0 0 c) Cash dividend entry for 2018 under Point b : Debit $ Credit $ Dec 31 2018 Dividend 18000 Cash 18000

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