1. Preferred stock dividends:

Example 1: Ahlia Corporation was organized on January 1, 2009. During its first year, the corporation issued 80,000 shares of $5 par value preferred stock and 400,000 shares of $1 par value common stock. At December 31, the company declared the following cash dividends:

2009 $ 16,000

2010 $60,000

2011 $140,000

Instructions

1. Show the allocation of dividends to each class of stock, assuming the preferred stock dividend is 5% and not cumulative.

2. Show the allocation of dividends to each class of stock, assuming the preferred stock dividend is 6% and cumulative.