Reference no: EM133142928

Question - Nokomis Co. has the following information available regarding its share capital at December 31, 2020:

Preferred shares, $3 cumulative, 20,000 shares issued $1,000,000

Preferred shares, $4 noncumulative, 10,000 shares issued 500,000

Common shares, 250,000 shares issued 1,500,000

The shares were issued when the corporation began its operations on January 1, 2018. No dividends were declared during 2018, 2019 and 2020. On November 27, 2021, the board of directors declares the required preferred share dividends and a $0.25 dividend for each of the common shares. The dividends are payable on January 2, 2022, to the shareholders of record on December 16, 2021.

Required -

a. Determine how much will be paid to each class of shares.

b. Prepare the journal entries on the appropriate dates to record the dividends.

c. Assume the maximum cash dividend the company can pay is $300,000. Determine how much will be paid to the preferred shareholders and to the common shareholders.