Exercise 14-2 (Part Level Submission) Knudsen Corporation was organized on Janua

Question

Exercise 14-2 (Part Level Submission) Knudsen Corporation was organized on January 1, 2016. During its first year, the corporation issued 1,950 shares of $50 par value preferred stock and 110,000 shares of $10 par value common stock. At December 31, the company declared the following cash dividends: 2016, $6,225; 2017, 13,900; and 2018, $28,500 (a) 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 stoc Allocation to common stock s

Explanation / Answer

Preferred stock dividends per year=(1950*50)*7%=$6825

NOTE:Since preferred dividends are non cumulative;hence dividends in arrears would not be paid for in the next period.

2016 2017 2018 Allocation to preferred stock 6325 6825 6825 Allocation to common stock 0 7075 21675

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