Yougi Corp. is an animation studio operating in South Florida. A recent press release contained the following information:
April 1, 2012-Yougi Corp. today announced that its Board of Directors has declared a cash dividend of $0.50 per share on 605,000 outstanding preferred shares. The dividend will be paid on or before May 31, 2012, to preferred shareholders of record at the close of business on May 26, 2012. The Board of Directors also announced a 100% common stock dividend will occur on May 31, 2012, on its 1,900,000 outstanding $0.01 par common stock for stockholders of record on May 26, 2012.
Required:
1. Prepare any journal entries that Yougi Corp. should make as the result of information in the preceding report.
2. What two requirements would the board of directors have considered before making the dividend decision?