Eby Corporation issued 200,000 shares of $20 par value, cumulative, 6% preferred stock on January 1, 2009, for $4,500,000. In December 2011, Eby declared its first dividend of $800,000.
Instructions
(a) Prepare Eby's journal entry to record the issuance of the preferred stock.
(b) If the preferred stock is not cumulative, how much of the $800,000 would be paid to common stockholders?
(c) If the preferred stock is cumulative, how much of the $800,000 would be paid to common stockholders?

Question

Quizplus · Accepted Answer

The Answer of Eby Corporation issued 200,000 shares of $20 par value, cumulative, 6% preferred stock on January 1, 2009, for $4,500,000. In December 2011, Eby declared its first dividend of $800,000.
Instructions
(a) Prepare Eby's journal entry to record the issuance of the preferred stock.
(b) If the preferred stock is not cumulative, how much of the $800,000 would be paid to common stockholders?
(c) If the preferred stock is cumulative, how much of the $800,000 would be paid to common stockholders?

Eby Corporation Issued 200,000 Shares of $20 Par Value, Cumulative