Exercise 11-6A Accounting for cumulative preferred dividends LO 11-3 When Crossett Corporation was organized in January Year 1, it immediately issued 4,900 shares of $47 par, 4 percent, cumulative preferred stock and 8,500 shares of $6 par common stock. Its earnings history is as follows: Year 1, net loss of $14,000; Year 2, net income of $60,100; Year 3, net income of $110,600. The corporation did not pay a dividend in Year 1. Required a. How much is the dividend arrearage as of January 1, Year 2? Dividend arrearage b. Assume that the board of directors declares a $35,924 cash dividend at the end of Year 2 (remember that the Year 1 and Year 2 preferred dividends are due). How will the dividend be divided between the preferred and common stockholders? (Amounts to be deducted should be indicated with minus sign.) Distributed to Shareholders Preferred Common Amount Total dividend declared Year 1 Arrearage Year 2 Preferred dividends Available for common Distributed to common 01 Total distribution $ 0 $ 0 Exercise 11-11A Issuing stock for assets other than cash LO 11-4 Tom Yuppy, a wealthy investor, exchanged a plot of land that originally cost him $56,280 for 1,340 shares of $10 par common stock issued to him by Leuig Corp. On the same date, Leuig Corp. issued an additional 2,680 shares of stock to Yuppy for $42 per share. Required a. What was the value of the land at the date of the stock issue? Value of the land b. Show the effect of the two stock issues on Leuig's books in a horizontal statements model. In the Cash Flow column, indicate whether the item is an operating activity (OA), investing activity (IA), or financing activity (FA). Use NA to indicate that an element was not affected by the event. Income Statement Expense Assets Revenue = Balance Sheet Stockholders' Equity Land Common PIC in Stock Excess Net Income Cash Flow Event Cash 1 - Exchange of land for shares 2 - Issue of additional shares c. Prepare the journal entries to record these transactions. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list X > 1 Record the entry for exchange of land with common stock. 2 Record the entry for additional issue of shares. Credit Note : = journal entry been Record entry Clear entry View general Journal