(Cash Dividend Entries) The books of John Dos Passos Corporation carried the following account balances as of December 31, 2006.

Cash $ 195,000 Preferred stock, 6% cumulative, nonparticipating, $50 par 200,000 Common stock, no par value, 300,000 shares issued 1,500,000 Paid-in capital in excess of par (preferred) 150,000 Treasury stock (common 4,200 shares at cost) 33,600 Retained earnings 105,000 The company decided not to pay any dividends in 2006.
The board of directors, at their annual meeting on December 21, 2007, declared the following: “The current year dividends shall be 6% on the preferred and $.30 per share on the common. The dividends in arrears shall be paid by issuing 1,500 shares of treasury stock.” At the date of declaration, the preferred is selling at $80 per share, and the common at $8 per share. Net income for 2007 is estimated at $77,000.
Instructions

(a) Prepare the journal entries required for the dividend declaration and payment, assuming that they occur simultaneously.

(b) Could John Dos Passos Corporation give the preferred stockholders 2 years’ dividends and common stockholders a 30 cents per share dividend, all in cash?