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: $$\begin{array} { l l }
2017 & \$ 6,000 \
2018 & \$ 30,000 \
2019 & \$ 60,000
\end{array}$$ Instructions
(a) Show the allocation of dividends to each class of stock, assuming the preferred stock dividend is 4% and not cumulative.
(b) Show the allocation of dividends to each class of stock, assuming the preferred stock dividend is 6% and cumulative.
(c) Journalize the declaration of the cash dividend at December 31, 2019 using the assumption of part (b).

Question

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: $$\begin{array} { l l } 
2017 & \$ 6,000 \
2018 & \$ 30,000 \
2019 & \$ 60,000
\end{array}$$ Instructions
(a) Show the allocation of dividends to each class of stock, assuming the preferred stock dividend is 4% and not cumulative.
(b) Show the allocation of dividends to each class of stock, assuming the preferred stock dividend is 6% and cumulative.
(c) Journalize the declaration of the cash dividend at December 31, 2019 using the assumption of part (b).

Quizplus · Accepted Answer

The Answer of 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: $$\begin{array} { l l } 
2017 & \$ 6,000 \
2018 & \$ 30,000 \
2019 & \$ 60,000
\end{array}$$ Instructions
(a) Show the allocation of dividends to each class of stock, assuming the preferred stock dividend is 4% and not cumulative.
(b) Show the allocation of dividends to each class of stock, assuming the preferred stock dividend is 6% and cumulative.
(c) Journalize the declaration of the cash dividend at December 31, 2019 using the assumption of part (b).

Sleep Corporation Was Organized on January 1, 2017 2017$6,0002018$30,0002019$60,000\begin{array} { l l } 2017 & \$ 6,000 \\2018 & \$ 30,000 \\2019 & \$ 60,000\end{array}201720182019​$6,000$30,000$60,000​

Sleep Corporation Was Organized on January 1, 2017 $\begin{array} { l l } 2017 & \$ 6,000 \\2018 & \$ 30,000 \\2019 & \$ 60,000\end{array}$