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