Sibley Inc. had the following stock issued and outstanding at January 1, 2013: 1. 100,000 shares of

Question:

Sibley Inc. had the following stock issued and outstanding at January 1, 2013:

1. 100,000 shares of no-par common stock.

2. 20,000 shares of $50 par, 7 percent, cumulative preferred stock. (Dividends are in arrears for one year, 2012.)

On March 8, 2013, Sibley declared a $225,000 cash dividend to be paid March 31 to shareholders of record on March 20.

Required

a. What amount of dividends will be paid to the preferred shareholders versus the common shareholders?

b. Prepare the journal entries required for these transactions. (Be sure to include the dates of the entries.)

Dividend
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...