Question

Additional Exercise 300 a-c Sleep Corporation was organized on January 1, 2017. During its first year, the corporation issued 40,000 shares of $5 par value preferred stock and 400,000 shares of $1 par value common stock. At December 31, the company declared the following cash dividends: 2017 $6,000 2018 $30,000 2019 $60,000 Show the allocation of dividends to each class of stock, assuming the preferred stock dividend is 4% and not cumulative. Preferred Common Total 2017 2018 2019

Answer 1

1) Preferred dividend = 40000*5*4% = 8000

	Preferred	Common	Total
2016	6000	0	6000
2017	8000	22000	30000
2018	8000	52000	60000

2) Preferred dividend = 40000*5*6% = 12000

	Preferred	Common	Total
2016	6000	0	6000
2017	18000	12000	30000
2018	12000	48000	60000

3) Journal entry

Cash dividend	60000
Preferred dividend payable		12000
Common dividend payable		48000