Computing and Journalizing Dividends for Preferred and Common Stock

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Computing and Journalizing Dividends for Preferred and Common Stock P12 - 32A Computing dividends on preferred and common stock [15 – 20 min] Fashonista Skincare has 10,000 shares of 3%, $20 par value preferred stock and 90,000 shares of $2 par common stock outstanding. During a three - year period, Fashionista declared and paid cash dividends as follows: 2010, $3,000; 2011, $13,000; and 2012, $17,000. Requirements 1. Compute the total dividends to preferred and to common for each of the three years if a. preferred is noncumulative. b. preferred is cumulative. 2. For requirement 1.b., journalize the declaration of the 2012 dividends on December 22, 2012, and payment on January 14, 2013. Use separate Dividends payable accounts for preferred and common. (15 - 20 min.) P 12 - 32A Req. 1 a. Noncummulative: 2010 dividend of $3,000: Preferred dividend* $3,000 Common dividend 0 Total dividend $3,000 *10,000 x $20 par x 3% = $6,000
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