Accentrics Limited has the following information available regarding its share capital at December 31, 2013:
Preferred shares, $3.50 cumulative, 20,000 shares issued......................$1,000,000
Preferred shares, $4.50 noncumulative, 10,000 shares issued.....................500,000
Common shares, 300,000 shares issued............................................1,500,000
The shares were issued when the corporation began operations on January 1, 2012. No dividends were declared during 2012 and 2013. On October 30, 2014, the board of directors declares the required preferred share dividends and a $0.50 dividend for each of the common shares. The dividends are payable on December 1, 2014, to the shareholders of record on November 16, 2014.
Instructions
(a) How much will be paid to each class of shares?
(b) Prepare journal entries on the appropriate dates for the 2014 dividends.
(c) Assume instead that the maximum cash dividend the company can pay in 2014 is $200,000. Determine the dividends in arrears, if any, at December 31, 2014.