Bentley Outdoor Furniture Company included the following stockholders€™ equity on its year-end balance sheet at February 28, 2013:

Requirements
1. Identify the different issues of stock that Bentley Outdoor Furniture Company has outstanding.
2. Give the summary entries to record issuance of all the Bentley stock. Assume that all the stock was issued for cash. Explanations are not required.
3. Suppose Bentley passed its preferred dividends for three years. Would the company have to pay these dividends in arrears before paying dividends to the common stockholders? Give your reasons.
4. What amount of preferred dividends must Bentley declare and pay each year to avoid having preferred dividends in arrears?
5. Assume that preferred dividends are in arrears for 2012. Journalize the declaration of an $840,000 dividend on February 28, 2013. An explanation is notrequired.

Transcribed Image Text:

Stockholders' Equity Preferred stock, 6.0% cumulative-par value $25 per share authorized 140,000 shares in each class.. Class A- issued 80,000 shares.2 Class B-issued 90,000 shares S 2,000,000 2,250,000 Common stock-$5 par value.. authorized 1,400,000 shares, issued 240,000 shares.. 1,200,000 Additional paid-in capital-commo Retained earnings 5,560,000 8,350,000 19,360.000