Question

ONLY PART C

Problem 14-02A a-c (Part Level Submission) The post-closing trial balance of Sheridan Corporation at December 31, 2020, contains the following stockholders' equity accounts. Preferred Stock (16,000 shares issued) Common Stock (259,000 shares issued) Paid-in Capital in Excess of Par-Preferred Stock Paid-in Capital in Excess of Par-Common Stock Common Stock Dividends Distributable Retained Earnings $800,000 2,590,000 259,000 410,000 259,000 921,900 A review of the accounting records reveals the following. 2. No errors have been made in recording 2020 transactions or in preparing the closing entry for net income. Preferred stock is $50 par, 6%, and cumulative; 16,000 shares have been outstanding since January 1, 2019. Authorized stock is 21,000 shares of preferred, 518,000 shares of common with a $10 par value. The January 1 balance in Retained Earnings was $1,120,000. On July 1, 21,600 shares of common stock were issued for cash at $18 per share. On September 1, the company discovered an understatement error of $87,000 in computing salaries and wages expense in 2019. The net of tax effect of $60,900 was properly debited directly to Retained Earnings. A cash dividend of $259,000 was declared and properly allocated to preferred and common stock on October 1. No dividends were paid to preferred stockholders in 2019. On December 31, a 10% common stock dividend was declared out of retained earnings on common stock when the market price per share was $18. Net income for the year was $588,000. On December 31, 2020, the directors authorized disclosure of a $193,000 restriction of retained earnings for plant expansion. (Use Note X.) 8. 9. 10.

Answer 1

Preferred stockholders will be paid dividends for 2 years 2019 and 2020
Annual Preferred Dividends	48000	=800000*6%
c
Allocation of the cash dividend to preferred Stock	96000	=48000*2
Allocation of the cash dividend to common Stock	163000	=259000-96000