Reference no: EM131957726

Problem

Permabilt Corp. was incorporated on January 1, 2016, and issued the following stock for cash: 2,800,000 shares of no-par common stock were authorized; 284,000 shares were issued on January 1, 2016, at $21 per share. 388,000 shares of $100 par value, 10.00% cumulative, preferred stock were authorized, and 145,000 shares were issued on January 1, 2016, at $138 per share. Net income for the years ended December 31, 2016, 2017, and 2018, was $4,820,000, $7,440,000, and $9,100,000, respectively. No dividends were declared or paid during 2016 or 2017. However, on December 17, 2018, the board of directors of Permabilt Corp. declared dividends of $5,570,000, payable on February 9, 2019, to holders of record as of January 4, 2019.

Use the horizontal model for the declaration of dividends on December 17, 2018. (Use amounts with + for increases and amounts with - for decreases.)

Use the horizontal model for the payment of dividends on February 9, 2019. (Use amounts with + for increases and amounts with - for decreases.)

Prepare the journal entries to record each of the below transactions. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) The issuance of common stock and preferred stock on January 1, 2016. The declaration of dividends on December 17, 2018. The payment of dividends on February 9, 2019.

Of the total amount of dividends declared during 2018, how much will be received by preferred shareholders?