Knudsen Bakeries was organized on January 1, 2024. During its first year, the company issued 2,000 shares of HK\($50\) par value preference shares and 100,000 shares of HK\($10\) par value ordinary shares. At December 31, the company declared the following cash dividends: 2024, HK\($5,000;

2025,\) HK\($12,000;\) and 2026, HK\($28,000\) (HK$ in thousands).

Instructions

a. Show the allocation of dividends to each class of shares, assuming the preference share dividend is 6% and non-cumulative.

b. Show the allocation of dividends to each class of shares, assuming the preference share dividend is 7% and cumulative.

c. Journalize the declaration of the cash dividend at December 31, 2026, under part (b).