Reference no: EM132605559
On December 31, 2020, the shareholders' equity of Finland Corporation shows the following:
Preferred shares-$ 6, no par, 8,000 shares outstanding, cumulative and fully participating1 after common shares have received a dividend based on the ratio of 2:1; $2 to common for every $1 current year
preferred dividend................................................................ $ 400,000
Common shares-no par, 60,000 shares outstanding...... 800,000
Retained earnings......................................................... 240,000
Total shareholders' equity............................................. 1,440,000
- If activated, the participation will be based on the relative balances in the share capital accounts at December 31, 2020.
- Preferred dividends were last paid on December 31, 2018, and the Board of Directors declared that all of the company's retained earnings are to be paid out in dividends on December 31, 2020.
Required:
Question 1: Provide, with supporting calculations, the entry required when the dividends were declared. Preface entries with Dr. or Cr.