ation was organized on January 1 2016 During its first year

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

Solution

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