Question

Exercise 14-02 a-c Oriole Corporation was organized on January 1, 2019. During its first year, the corporation issued 1,900 shares of $50 par value preferred stock and 101,000 shares of $10 par value common stock. At December 31, the company declared the following cash dividends: 2019, $5,550; 2020, $14,500; and 2021, $29,000. Show the allocation of dividends to each class of stock, assuming the preferred stock dividend is 7% and noncumulative. 2019 2020 2021 Allocation to preferred stock $ $ $ Allocation to common stock $ $ $ SHOW LIST OF ACCOUNTS LINK TO TEXT Show the allocation of dividends to each class of stock, assuming the preferred stock dividend is 9% and cumulative. 2019 2020 2021 Allocation to preferred stock $ $ $ Allocation to common stock $ $ $ SHOW LIST OF ACCOUNTS LINK TO TEXT Journalize the declaration of the cash dividend at December 31, 2021, under part (b). (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Date Account Titles and Explanation Debit Credit Dec. 31 Click if you would like to Show Work for this question: Open Show Work SHOW LIST OF ACCOUNTS LINK TO TEXT Question Attempts: 0 of 5 used SAVE FOR LATER SUBMIT ANSWER

Answer 1

Solution: 1 Assuming the preferred stock dividend is 7% Particulars Dividend Preferred stock allocation Balance to Common stock $ $ $ 2019 2020 2021 5,550 $14,500 $ 29,000 5,550 $ 6,650 $ 6,650 - $ 7,850 $ 22,350 (not cumulative, so 7% to preferred stockholders = 0.07 * $95,000($50 x 1,900) = $6,650) 2 Assuming the preferred stock dividend is 9% Particulars Dividend Preferred stock allocation Balance to Common stock $ $ $ 2019 5,550 5,550 - 2020 $14,500 $ 11,550 $ 2,950 2021 $ 29,000 $ 6,650 $ 22,350 (cumulative, so 9% to preferred stockholders = 0.09 x $95,000($50 x 1,900) = $8,550) Arrears in 2019 = $8,550 - $5,550 = $3,000 Total preferred dividend in 2020 = $8,550 + $3,000 = $11,550 $29,000 Dec-31 Cash Dividends Dividends Payable (To record the declaration of cash dividend) $29,000