Dividends and Cumulative Preferred Stock Renton Interiors, Inc., maker of seats and other interior equipment for Boeing aircraft, started 20X8 with the following balance sheet.

6% Cumulative convertible preferred stock, par value $10 a share, authorized 150,000 shares; issued 52,136 shares Common stock, par value $.20 a share, authorized 2,000,000 shares, issued 1,322,850 shares Additional paid-in capital Retained earnings Less: Treasury stock, at cost Preferred stock, 11,528 shares Common stock, 93,091 shares Total stockholders' equity $ 521,360 264,570 2,063,351 2,463,951 (80,249) (167,549) $5,065,434 1. Suppose Renton Interiors had paid no dividends, preferred or common, in the prior year, 20X7. All preferred dividends had been paid through 20X6. Management decided at the end of 20X8 to pay $.04 per share common dividends. Calculate the preferred dividends that would be paid dur- ing 20X8. Prepare journal entries for recording both preferred and common dividends. Assume no preferred or common shares were issued or purchased during 20X8. 2. Suppose 20X8 net income was $440,000. Compute the 20X8 ending balance in the Retained Earnings account.