The following elements of stockholders’ equity are from the balance sheet of Sacchetti Marketing Corp. at December 31, 2015:
Stockholders' Equity
Paid-In Capital:
Preferred Stock—5%, $2 Par Value; 90,000 shares authorized, 45,000 shares issued and outstanding .........................$ 90,000
Common Stock—$0.10 Par Value; 10,000,000 shares authorized, 9,250,000 shares issued and outstanding ......................925,000
Sacchetti paid no preferred dividends in 2015.
Requirements
1. Compute the dividends to the preferred and common shareholders for 2016 if total dividends are $155,000 and assuming the preferred stock is noncumulative.
2. Record the journal entries for 2016 assuming that Sacchetti Marketing Corp. declared the dividends on July 1 for stockholders of record on July 15. Sacchetti paid the dividends on July 31.