Question

gnment et 02:35 / Remaining 160 min CALCULATOR FULL SCREEN PRINTER VERSION BACK NEXT Question 15 Blossom Corporation was organized on January 1, 2019. During its first year, the corporation issued 1,900 shares of $50 par value preferred stock and 100,000 shares of $10 par value common stock. At December 31, the company declared the following cash dividends: 2019, 56,150; 2020, $13,600; and 2021, $27,500 Show the allocation of dividends to each dass of stock, assuming the preferred stock dividend is 7% and noncumulative. 2019 2020 Allocation to preferred stock Allocation to common stock Show the allocation of dividends to each class of stock, assuming the preferred stock dividend is 8% and cumulative. 2019 2020 2021 Allocation to preferred stock Allocation to common stock Journalize the declaration of the cash dividend at December 31, 2021, under part (b). (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry for the account titles and enter for the amounts.) Date Account Titles and Explanation Debit Credit

Answer 1

Answer :-

Given , Preferred stock = 1,900 shares × $50 par value

Preferred stock = $95,000

Common stocks = 100,000 shares × $10 par value

Common stocks = $1,000,000

Allocation of dividends to each class of stock, assuming the preferred stock dividend is 7% and noncumulative

	2019	2020	2021
Dividend Declared	$6,150	$13,600	$27,500
Allocation to Preferred stock (Note -1)	$6,150	$6,650	$6,650
Allocation to Common Stock (Note -1)	$0	$6,950	$20,850

Note 1:-

Preferred stock = $95,000

Rate = 7 % and Dividend is noncumulative

Preferred Stock Dividend = $95,000 × 7% = 6,650

In 2019 ,

Dividend Declared - $6,150

Preferred stock get $6,150 as First Dividend is paid to Preferred stock Holder than Remaining amount is paid to Common stock.

So Common stocks Holder get $0 Dividend.

Preferred Stock Dividend is noncumulative than there is no arrears of Dividend.

In 2020,

Dividend Declared - $13,600

Preferred stock Dividend = $6,650

Common stock dividend= ($13,600 - $6,650 ) = $6,950

In 2021,

Dividend Declared - $27,500

Preferred stock Dividend = $6,650

Common stock dividend= ($27,500 - $6,650 ) = $20,850

Allocation ofdividends to each class of stock, assuming the preferred stock dividend is 8% and cumulative

	2019	2020	2021
Dividend Declared	$6,150	$13,600	$27,500
Allocation to Preferred stock (Note -1)	$6,150	$9,050	$7,600
Allocation to Common Stock (Note -1)	$0	$4,550	$19,900

Note 1:-

Preferred stock = $95,000

Rate = 8 % and Dividend is cumulative

Preferred Stock Dividend = $95,000 × 8% = 7,600

In 2019 ,

Dividend Declared - $6,150

Preferred stock get $6,150 as First Dividend is paid to Preferred stock Holder than Remaining amount is paid to Common stock.

So Common stocks Holder get $0 Dividend.

Preferred Stock Dividend is cumulative than there is arrears of Dividend.

Preferred Arrears of Dividend = $7,600 - $ 6,150 = $1,450

This Arrears of Dividend is added to next year Dividend.

In 2020,

Dividend Declared - $13,600

Arrears of Preferred stock dividend = $ 1,450

Preferred stock Dividend = $7,600 + $1,450 = $9,050

Common stock dividend= ($13,600 - $9,050 ) = $4,550

In 2021,

Dividend Declared - $27,500

Preferred stock Dividend = $7,600

Common stock dividend= ($27,500 - $7,600) = $19,900

.

Journalize the declaration of the cash dividend at December 31, 2021, under part (b) -

Date	Account Titles and Explanation	Debit	Credit
Dec 31,2021	Cash Dividend A/c Dr.	$27,500
	To Dividend Payable A/c		$27,500
	(To record declaration of cash dividend)