Old McDonald had a pig farm. MacDonald Farm Products (MFP) was created on January 1,...
80.2K
Verified Solution
Link Copied!
Question
Accounting
Old McDonald had a pig farm. MacDonald Farm Products (MFP) was created on January 1, 2019 with unlimited authorized common shares. On Jan 2, 2019, MFP issued and sold 60000 common shares for $6 each. Also on Jan 2, 2019, MFP issued and sold 10000, $2 noncumulative preferred shares for $10 each. MFP issued and sold another 10000 common shares on Sept 1, 2019 for $8 each. Profit for 2019 was zero; the company broke even and decided it would not be prudent to declare dividends. 2020 was a much better year. Year-end (December 31) showed $80000 profit (the profit is currently in "income summary", so include the closing entry in your answer). On Dec 31, 2020, MFP declared a $40000 cash dividend payable on January 31, 2021 to shareholders of record on January 20. Required: al Prepare all necessary journal entries for the above transactions, from Jan 2, 2019 to Jan 31, 2021. (There should be 6 entries in total, and show your workings for the dividend calculation.) b) How would the dividend have been allocated if the preferred shares were cumulative instead of noncumulative ?
Answer & Explanation
Solved by verified expert
Get Answers to Unlimited Questions
Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!
Membership Benefits:
Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
