Exercise- Cash Dividends

Cope Company declares a $90,000 dividend. Cope's common stock has a $5 par value and 80,000 shares outstanding. Cope's preferred stock is 5%, $12 par, and there are 20,000 shares outstanding. Cope has not paid dividends in the past three years. Cope's preferred stock is cumulative.

Required:

a. Determine how the $90,000 in dividends should be allocated to preferred and common stockholders.

b. Prepare the journal entry that would be recorded on the date of declaration. For compound journal entries, if an amount box does not require an entry, leave it blank.

c. Determine how the $90,000 in dividends should be allocated to preferred and common stockholders, assuming that the preferred stock is noncumulative.