Question

ment NEXT PRINTER VERSION BACK FULL SCREEN MESSAGE MY INSTRUCTOR CALCULATOR Exercise 11-05 a-c Blossom Corporation issued 110,000 shares of $20 par value, cumulative, 8 % preferred stock on January 1, 2019, for $2,520,000. In December 2021, Blossom declared its first dividend of $750,000. Prepare Blossom's journal entry to record the issuance of the preferred stock. (Credit account titles are autonatically indented when amount is entered. Do not indent manualy. If no entry is required, select "No Entry" for the account titles and enter 0 for the ainounts.) Credit Account Titles and Explanation Debit If the preferred stock is not cumulative, how much of the $750,000 would be paid to common stockholders? Common Stock Dividends If the preferrred stock is cumulative, how much of the $750,000 would be paid to common stockholders? Common Stock Dividends $

Answer 1

SOLUTION : 1
Journal Entries
Date	Account Title and explanation	Debit	Credit
January 01, 2019	Cash	$                25,20,000
	Preferred Stock (110,000 Shares X $ 20)		$     22,00,000
	Paid in Capital in excess of par - Preferred Stock		$       3,20,000
SOLUTION : 2	PREFERRED STOCK IS NON CUMULATIVE
	Preferred Stock Par Value =	$                22,00,000
	Dividend Per Year = $ 2,200,000 X 8% =	$                  1,76,000
	Total dividend paid =	$                  7,50,000
	Less: Preferred Stock Dividend	$                  1,76,000
	Dvidend to Common stock holders	$                  5,74,000
	Answer = $ 574,000
SOLUTION : 3	PREFERRED STOCK IS CUMULATIVE
	Preferred Stock Par Value =	$                22,00,000
	Dividend Per Year = $ 2,200,000 X 8% =	$                  1,76,000
	Dividend upto Dec , 21 = 3 years = $ 176,000 X 3 Years =	$                  5,28,000
	Total dividend paid =	$                  7,50,000
	Less: Preferred Stock Dividend	$                  5,28,000
	Dvidend to Common stock holders	$                  2,22,000
	Answer = $ 222,000