Knudsen Corporation was organized on January 1, 2016. During its first year, the

Question

Knudsen Corporation was organized on January 1, 2016. During its first year, the corporation issued 2,050 shares of $50 par value preferred stock and 107,000 shares of $10 par value common stock. At December 31, the company declared the following cash dividends: 2016, $5,675; 2017, $13,500; and 2018, $28,000.

Show the allocation of dividends to each class of stock, assuming the preferred stock dividend is 7% and noncumulative.

Show the allocation of dividends to each class of stock, assuming the preferred stock dividend is 8% and cumulative.

Journalize the declaration of the cash dividend at December 31, 2018, under part (b). (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Knudsen Corporation was organized on January 1, 2016. During its first year, the corporation issued 2,050 shares of $50 par value preferred stock and 107,000 shares of $10 par value common stock. At December 31, the company declared the following cash dividends: 2016, $5,675; 2017, $13,500; and 2018, $28,000.

Explanation / Answer

Dear Student Thank you for using Chegg Please find below the answer Statementshowing Computations Paticulars 2016 2017 2018 Total Dividend Paid           5,675.00        13,500.00        28,000.00 Preference Dividend to be paid = 2050*50*7%           7,175.00           7,175.00           7,175.00 Preference Dividend Paid = Existing           5,675.00           7,175.00           7,175.00 Dividend available for common stock                        -             6,325.00        20,825.00 b) Paticulars 2016 2017 2018 Total Dividend Paid           5,675.00        13,500.00        28,000.00 Preference Dividend to be paid = 2050*50*7%           7,175.00           7,175.00           7,175.00 Preference Dividend Paid = Existing + Arrear           5,675.00           8,675.00           7,175.00 Dividend available for common stock                        -             4,825.00        20,825.00 Arrears of preference Dividend           1,500.00                        -   b) Dr Cr Retained earnings DR        28,000.00 To Preferred dividend payable           7,175.00 To Common stock dividend payable        20,825.00

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