Stockholders equity category of jackson company

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The Stockholders' Equity category of Jackson Company's balance sheet as of January 1, 2014, appeared as follows:

Preferred stock, $100 par, 8%, 2,000 shares issued and outstanding $200,000 Common stock, $10 par, 5,000 shares issued

and outstanding

50,000

Additional paid-in capital

300,000

Total contributed capital

$550,000

Retained earnings

400,000

Total stockholders' equity

$950,000

The notes that accompany the financial statements indicate that Jackson has not paid dividends for the two years prior to 2014. On July 1, 2014, Jackson declares a dividend of $100,000 to be paid to preferred and common stockholders on August 1.

Required

1. Determine the amounts of the dividends to be allocated to preferred and common stock- holders assuming that the preferred stock is noncumulative, nonparticipating stock.

2. Record the appropriate journal entries on July 1 and August 1, 2014.

3. Determine the amounts of the dividends to be allocated to preferred and common stockholders assuming instead that the preferred stock is cumulative, nonparticipating stock.

Reference no: EM13954419

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