Seasonal Outdoor Furniture Company included the following stockholders’ equity on its year-end balance sheet at March 31, 2022: 

Requirements

1. Identify the different issues of stock that Seasonal Outdoor Furniture Company has outstanding.

2. Give the summary entries to record the issuance of all the Seasonal stock. Assume that all the stock was issued for cash. Explanations are not required.

3. Suppose Seasonal passed its preferred dividends for three years. Would the company have to pay those dividends in arrears before paying dividends to the common stockholders? Give your reason.

4. What amount of preferred dividends must Seasonal declare and pay each year to avoid having preferred dividends in arrears?

5. Assume that preferred dividends are in arrears for 2020. Journalize the declaration of an $860,000 dividend on March 31, 2022. An explanation is not required.

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Stockholders' Equity Preferred stock, 3.5% cumulative-par value $10 per share; authorized 140,000 shares in each class Class A-issued 70,000 shares... Class B-issued 98,000 shares.... Common stock-$5 par value: authorized 1,000,000 shares, issued 270,000 shares....... Additional paid-in capital-common Retained earnings......... $ 700,000 980,000 1,350,000 5,540,000 8,310,000 $16,880,000