Fowler Corporation was organized in January 2012. The state authorized 150,000 shares of no-par common stock and

Question:

Fowler Corporation was organized in January 2012. The state authorized 150,000 shares of no-par common stock and 50,000 shares of 12%, $8 par, preferred stock. Record the following transactions that occurred in 2012:

a. Issued 28,000 shares of common stock at $32 per share.

b. Issued 15,000 shares of preferred stock for a piece of land appraised at $200,000.

c. Declared a cash dividend sufficient to meet the current-dividend preference on preferred stock and paid common shareholders $2 per share.

d. How would your answer to (c) change if the dividend declared were not sufficient to meet the current-dividend preference on preferred stock?

Common Stock
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A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...