Question

The following elements of stockholders equity are from the balance sheet of Saris Marketing Corp, at December 31, 2017 (Cick on the icon to view the data.) Saris paid no preferred dividends in 2017 Read the requitements Requirement 1. Compute the dividends to the preferred and common sharehalders for 2018 if total dividends are $175,000 and assuming the prefered stock is noncumulative. Assume no changes in preferred and common stock in 2013. (Complete all input boxes. Enter "0" for any zero amounts) Saris's 2018 dividend would he divided betwoen prefered and common stockholders in this manner Total Dividend-2018 Dividend to prefemred stockholders Dividend in arrears Current year dividend Total dividend to preferred stockholders Dividend to common stockhoider Requirement 2. Record the journal entriess for 2018 assuming that Saris Marketing Corp. declared the dividends on July 1 for stockholders of fncond on July 15 Saris paid the dividends on July 31 (Record dabits first, then credts Select the axplanation on the last Ine of the journal entry table If no endry is required, select No entry required ithe frst lina of the Accourts and Explanation cokimn and leave the remaining cells blank) estion

Answer 1

Preferred shares are non-cumulative and thus only the current year dividend would be paid
Once preferred shareholders are paid the remaining dividend would be paid to common shareholders
1.
Calculation of preferred and common dividend is shown below
Total dividend - 2018		$175,000
Dividend to preferred stockholders
Dividend in arrears	$0
Current year dividend (130000*6%)	$7,800
Total dividend to preferred shareholders		$7,800
Dividend to common shareholders		$167,200
2
Journal entry to record dividend declared
Date	Accounts and explanation	Debit	Credit
1-Jul	Cash dividends	$175,000
	Dividend payable - preferred		$7,800
	Dividend payable - common		$167,200
	(To record dividend declared)
On date of record there is no journal entry required
Journal entry to record dividend paid
Date	Accounts and explanation	Debit	Credit
1-Jul	Dividend payable - preferred	$7,800
	Dividend payable - common	$167,200
	Cash		$175,000
	(To record dividend paid)