Reference no: EM132893192

Question - Derek Corporation was organized on January 1, 2018. During its first year, the corporation issued 20,000 shares of $5 shares par value preferred stock and 200,000 shares of $1 par value common stock. At December 31, the company declared the following cash dividends:

2018 $4,000

2019 $13,000

2020 $28,000

Required -

a) Show the allocation of dividends to each class of stock, assuming the preferred stock dividend is 5% and not cumulative.

b) Show the allocation of dividends to each class of stock, assuming the preferred stock dividend is 7% and cumulative.

c) Journalize the declaration of the cash dividend at December 31, 2018 using the assumption of part (b).