Hodge Corporation issued 100,000 shares of $20 par value, cumulative, 6% preferred stock on January 1, 2019,

Question:

Hodge Corporation issued 100,000 shares of $20 par value, cumulative, 6% preferred stock on January 1, 2019, for $2,300,000. In December 2021, Hodge declared its first dividend of $500,000.

Instructions

a. Prepare Hodge’s journal entry to record the issuance of the preferred stock.

b. If the preferred stock is not cumulative, how much of the $500,000 would be paid to common stockholders?

c. If the preferred stock is cumulative, how much of the $500,000 would be paid to common stockholders?

Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may... Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...

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