Klammer Consulting, Inc. has 10,000 shares of $4.50 preferred shares and 50,000 common shares outstanding. Klammer Consulting, Inc. declared and paid the following dividends during a three-year period: 2012, $20,000; 2013, $100,000; and 2014, $200,000.

Requirements

1. Compute the total dividends to preferred shareholders and to common shareholders for each of the three years if

a. Preferred is noncumulative.

b. Preferred is cumulative.

2. For case 1(b), journalize the declaration of the 2014 dividends on December 28, 2014, and the payment of the dividends on January 17, 2015. Use separate Dividends Payable accounts for preferred and common shares.