S10-13

(Learning Objective 4: Divide cash dividends between preferred and common stock) Sterling Garde, Inc., has 90,000 shares of $1.35 preferred stock outstanding in addition to its common stock. The $1.35 designation means that the preferred stockholders receive an annual cash dividend of $1.35 per share. In 2012, Sterling Garde declares an annual dividend of $500,000. The allocation to preferred and common stockholders is as follows:

1. $121,500 (90,000 shares