Chapter 13, Problem E13.27E

Computing dividends on preferred and common stock and journalizing

Learning Objective 4
1. Preferred Dividend 2018 $9,000

Northern Communications has the following stockholders' equity on December 31, 2018.

                    Stockholders' Equity 
Paid-ln Capital: 
Preferred Stock—5%, $11 Par Value; 150,000 shares 
authorized, 20,000 shares issued and outstanding             $ 220,000
Common Stock—$2 Par Value; 575,000 shares 
authorized, 380,000 shares issued and outstanding              760,000
Paid-In Capital in Excess of Par—Common                        680,000
Total Paid-In Capital 						1,660,000
Retained Earnings 					   200,000
Total Stockholders' Equity 	                            $   1,860,000

Requirements

1. Assuming the preferred stock is cumulative, compute the amount of dividends to preferred stockholders and to common stockholders for 2018 and 2019 if total dividends are $9,000 in 2018 and $45,000 in 2019. Assume no changes in preferred stock and common stock in 2019.
2. Record the journal entries for 2018, assuming that Northern Communications declared the dividend on December 1 for stockholders of record on December 10. Northern Communications paid the dividend on December 20.