Timber Ridge Corporation was organized on January 1 2015. During its first year the corporation issued 40000 shares of $5 par value preferred stock and 400000 shares of $1 par value common stock. At December 31 the company declared the following cash dividends: $$\begin{array} { l l }
2015 & \$ 8,000 \
2016 & \$ 30,000 \
2017 & \$ 70,000
\end{array}$$ Instructions
(a) Show the allocation of dividends to each class of stock assuming the preferred stock dividend is 5% 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 2017 using the assumption of part (b).

Question

Timber Ridge Corporation was organized on January 1 2015. During its first year the corporation issued 40000 shares of $5 par value preferred stock and 400000 shares of $1 par value common stock. At December 31 the company declared the following cash dividends: $$\begin{array} { l l } 
2015 & \$ 8,000 \
2016 & \$ 30,000 \
2017 & \$ 70,000
\end{array}$$ Instructions
(a) Show the allocation of dividends to each class of stock assuming the preferred stock dividend is 5% 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 2017 using the assumption of part (b).

Quizplus · Accepted Answer

The Answer of Timber Ridge Corporation was organized on January 1 2015. During its first year the corporation issued 40000 shares of $5 par value preferred stock and 400000 shares of $1 par value common stock. At December 31 the company declared the following cash dividends: $$\begin{array} { l l } 
2015 & \$ 8,000 \
2016 & \$ 30,000 \
2017 & \$ 70,000
\end{array}$$ Instructions
(a) Show the allocation of dividends to each class of stock assuming the preferred stock dividend is 5% 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 2017 using the assumption of part (b).

Timber Ridge Corporation Was Organized on January 1 2015 2015$8,0002016$30,0002017$70,000\begin{array} { l l } 2015 & \$ 8,000 \\2016 & \$ 30,000 \\2017 & \$ 70,000\end{array}201520162017​$8,000$30,000$70,000​

Timber Ridge Corporation Was Organized on January 1 2015 $\begin{array} { l l } 2015 & \$ 8,000 \\2016 & \$ 30,000 \\2017 & \$ 70,000\end{array}$