5 - Liabilities and Stockholders' Equity (Total 17 marks) Part A - Journal entries CED Corporation reported stockholders' equity on December 31, 2021 as follows: Common stock, $5 par value, 1,000,000 shares authorized, 300,000 shares issued $1,500,000 Additional paid-in capital, common stock Retained earnings The following selected transactions occurred during 2021: Feb. 14 Mar. 14 June 1 June 30 Dec.1 Dec.31 500,000 2,000,000 The board of directors declared a 5% stock dividend to stockholders of record on March 1, payable March 14. The stock was selling for $9 per share on March 1. Paid the stock dividend. A cash dividend of $0.20 per share was declared by the board of directors to stockholders of record on June 20, payable June 30. Paid the cash dividend. Borrowed $45,000 cash from a local bank with a 60-day, 9% note payable Record the accrued interest expense. During 2021, CED Corporation earned net income of $900,000. Required: 1. Prepare the journal entries to record the above transactions. (10 marks) 2. What is the amount of retained earnings as of December 31, 2021? (4 marks) Part B - Allocation of Dividend (3 marks) A corporation has the following stocks outstanding when the company's board of directors declared a $95,000 cash dividend during the current year: Preferred stock, $50 par, 8%, 5,000 shares issued, cumulative Common stock, $10 par, 50,000 shares issued Total $ 250,000 500,000 $750,000 Required: Allocate the cash dividend between the preferred and common stockholders assuming the preferred stock dividends are one year in arrears