Question

I need help with the bottom portion

PREFERED DIVIDENDS Show the effects of each transaction on the balance sheet equation, and prepare journal entries to receord the transactions. Ref. Liabilities Equity Assets (a) On January 1, Garden Stateissued 10,000 shares of $10 Preferred Stock (+SE) Cash (+A) 190,000 100,000 par cummaltive preferred stock for $19 per share. The Additional Paid-in Capital (+SE) 90,000 stock pays a cumulative annual dividend of 7% of par value. Date Account Debit Credit 1-May Cash 190,000 Preferred Stock 100,000 Additional Paid-in Capital 90,000 Liabilities Equity Assets On December 1, Garden State pays the preferred stock Cash (-A) (7,000) Dividends (-SE) (b) (7,000) holders dividends of 7% of par value. Date Account Debit Credit Dividends Dec. 1 7,000 Cash 7,000 In the coming years Garden State pays dividends as shown below. Complete the table to show how dividends would be allocated between preferred and common stockholders. Total Dividends Period Preferred Common $20,000 $5,000 $20,000 Year 1 Year 2 $10,000 $10,000 $0 $10,000 Year 3 $0 $0 Year 4 $20,000 Year 5

Answer 1

Unpaid Dividend of prior years on cumulative preferred stock is paid before any dividend is paid to common stockholders
Annual Dividend on preferred stock = 10,000*10*7% = $7,000
Period	Total Dividend	Preferred	Common	Unpaid Dividend on preferred Stock
Year 1	20000	7000	13000	0
2	5000	5000	0	2000
3	10000	9000	1000	0
4	0	0	0	7000
5	20000	14000	6000	0