Martin Outdoor Furniture Company included the following stockholders’ equity on its year-end balance sheet at February 28, 2015:

Stockholders’ Equity

Preferred stock, 5.0% cumulative—par value $25 per share

authorized 140,000 shares in each class

Class A—issued 75,000 shares......................................$ 1,875,000

Class B—issued 94,000 shares....................................... 2,350,000

Common stock—$5 par value:

authorized 1,400,000 shares,

issued 268,000 shares.................................................... 1,340,000

Additional paid-in capital—common............................. 4,560,000

Retained earnings............................................................ 8,470,000

                                                                                          $18,595,000

Requirements

1. Identify the different issues of stock that Martin Outdoor Furniture Company has outstanding.

2. Give the summary entries to record issuance of all the Martin stock. Assume that all the stock was issued for cash. Explanations are not required.

3. Suppose Martin passed its preferred dividends for three years. Would the company have to pay these dividends in arrears before paying dividends to the common stockholders? Give your reasons.

4. What amount of preferred dividends must Martin declare and pay each year to avoid having preferred dividends in arrears?

5. Assume that preferred dividends are in arrears for 2014. Journalize the declaration of an $832,000 dividend on February 28, 2015. An explanation is not required.