The books of Conchita Corporation carried the following account balances as of December 31, 2015.

The company decided not to pay any dividends in 2015.
The board of directors, at their annual meeting on December 21, 2016, declared the following: “The current year dividends shall be 6% on the preference and R\($0.30\) per share on the ordinary. The dividends in arrears shall be paid by issuing 1,500 treasury shares.” At the date of declaration, the preference is selling at R\($80\) per share, and the ordinary at R\($12\) per share. Net income for 2016 is estimated at R\($77\),000.
Instructions

(a) Prepare the journal entries required for the dividend declaration and payment, assuming that they occur simultaneously.

(b) Could Conchita Corporation give the preference shareholders 2 years’ dividends and ordinary shareholders a 30 cents per share dividend, all in cash?

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Cash Share Capital-Preference (6% cumulative, non-participating, R$50 par) Share Capital-Ordinary (no-par value, 300,000 shares issued) Share Premium-Preference Treasury Shares (ordinary 2,800 shares at cost) Retained Earnings R$ 195,000 300,000 1,500,000 150,000 33,600 105,000