1.On December 31, 2020, the shareholders' equity of Finland Corporation shows the following:

Preferred shares$ 6, no par, 8,000 shares outstanding,

cumulative and fully participating¹ after common

shares have received a dividend based on the ratio

of 2:1; $2 to common for every $1 current year

preferred dividend................................................................ $ 400,000

Common sharesno par, 60,000 shares outstanding...... 800,000

Retained earnings......................................................... 240,000

Total shareholders' equity............................................. 1,440,000

¹If activated, the participation will be based on the relative balances in the share capital accounts at December 31, 2020.

Preferred dividends were last paid on December 31, 2018, and the Board of Directors declared that all of the company's retained earnings are to be paid out in dividends on December 31, 2020.

Required: Provide, with supporting calculations, the entry required when the dividends were declared. Preface entries with Dr. or Cr.