Baur Company has 21,000 shares of $10 par value, 8% preferredstock and 500,000 shares of $1 par value common stock outstanding.As of December 31, 2018, it had $900,000 of Retained earnings. OnDecember 31, 2018, the Board of Directors is considering thedistribution of a cash dividend to the common and preferredstockholders. No dividends were declared in 2016 and 2017 and nodividends were in arrears prior to 2016. The company is consideringthe following options.
Option 1 The preferred stock is noncumulative and the dividendfor 2018 would be $30,000.
Option 2 The preferred stock is cumulative and the dividendswould be $30,000.
Option 3 The preferred stock is cumulative and the dividendswould be $75,000.
Required: For each scenario, determine the dollar amount ofdividends that would be paid to each class of stockholder.
Define the following as they pertain to dividend distribution:a. Date of declaration b. Date of record c. Date of payment
On which of these dates (date of declaration, date of record ordate of payment) would a company NOT make a journal entry?
