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
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and outstanding
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50,000
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Additional paid-in capital
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300,000
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Total contributed capital
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$550,000
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Retained earnings
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400,000
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Total stockholders' equity
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$950,000
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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.