Superior Outdoor Furniture Company included the following stockholders’ equity on its year-end balance sheet at February 28, 2022: 

Requirements

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

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

3. Suppose Superior 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 reasons.

4. What amount of preferred dividends must Superior 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 a $900,000 dividend on February 28, 2022. An explanation is not required.

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Stockholders' Equity Preferred stock, 7.5% cumulative-par value $25 per share; authorized 130,000 shares in each class Class A-issued 79,000 shares...... Class B-issued 94,000 shares...... Common stock-$10 par value: authorized 1,600,000 shares, issued 260,000 shares.... Additional paid-in capital-co Retained earnings... -common $ 1,975,000 2,350,000 2,600,000 5,580,000 8,360,000 $20,865,000