Derek Corporation was organized on January 1, 2013. During its first year, the corporation issued 40,000 preference shares with a $5 par value and 400,000 ordinary shares with a $1 par value. At December 31, the company declared the following cash dividends: Instructions
(a) Show the allocation of dividends to each class of shares, assuming the preference shares dividend is 4% and not cumulative.
(b) Show the allocation of dividends to each class of shares, assuming the preference shares dividend is 5% and cumulative.
(c) Journalize the declaration of the cash dividend at December 31, 2015 using the assumption of part (b).

Question

Derek Corporation was organized on January 1, 2013. During its first year, the corporation issued 40,000 preference shares with a $5 par value and 400,000 ordinary shares with a $1 par value. At December 31, the company declared the following cash dividends:  Instructions
(a) Show the allocation of dividends to each class of shares, assuming the preference shares dividend is 4% and not cumulative.
(b) Show the allocation of dividends to each class of shares, assuming the preference shares dividend is 5% and cumulative.
(c) Journalize the declaration of the cash dividend at December 31, 2015 using the assumption of part (b).

Quizplus · Accepted Answer

The Answer of Derek Corporation was organized on January 1, 2013. During its first year, the corporation issued 40,000 preference shares with a $5 par value and 400,000 ordinary shares with a $1 par value. At December 31, the company declared the following cash dividends:  Instructions
(a) Show the allocation of dividends to each class of shares, assuming the preference shares dividend is 4% and not cumulative.
(b) Show the allocation of dividends to each class of shares, assuming the preference shares dividend is 5% and cumulative.
(c) Journalize the declaration of the cash dividend at December 31, 2015 using the assumption of part (b).

Derek Corporation Was Organized on January 1, 2013