StarLight Ltd. is authorized to issue 10,000, $4 noncumulative preferred shares. On January 13, it issued 3,000

Question:

StarLight Ltd. is authorized to issue 10,000, $4 noncumulative preferred shares. On January 13, it issued 3,000 preferred shares for $90 cash per share.

(a) Prepare a journal entry to record the transaction.

(b) Determine the total amount of dividends that must be paid to the preferred shareholders prior to paying a dividend to common shareholders.

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...