Cash Dividends

The Stockholders' Equity section of Jackson Company's balance sheet as of January 1, 2017, appeared as follows:

Preferred stock, $100 par, 8%, 2,000 shares issued and outstanding	$200,000
Common stock, $10 par, 5,000 shares issued and outstanding	50,000
Additional paid-in capital	300,000
Total contributed capital	$550,000
Retained earnings	400,000
Total stockholders equity	$950,000

The notes that accompany the financial statements indicate that Jackson has not paid dividends for the two years prior to 2017. On July 1, 2017, Jackson declares a dividend of $100,000 to be paid to preferred and common stockholders on August 1.

Required:

1. Determine the amounts of the dividends to be allocated to preferred and common stockholders assuming that the preferred stock is noncumulative, nonparticipating stock.

Amount of Dividends

-Preferred Stock: $

-Common Stock: $

2. Identify and analyze the effect of the transactions on July 1 and August 1, 2017.

July 1:

-Activity:

-Accounts:

-Statement(s):

How does this entry affect the accounting equation? If a financial statement item is not affected, select "No Entry" and leave the amount box blank. If the effect on a financial statement item is negative, i.e, a decrease, be sure to enter the answer with a minus sign.

How does this entry affect the accounting equation? If a financial statement item is not affected, select "No Entry" and leave the amount box blank. If the effect on a financial statement item is negative, i.e, a decrease, be sure to enter the answer with a minus sign.

3. Determine the amounts of the dividends to be allocated to preferred and common stockholders assuming instead that the preferred stock is cumulative, nonparticipating stock.

Amount of Dividends

-Preferred Stock: $

-Common Stock: $

Balance Sheet Income Statement Net Stockholders' Equity Assets Liabilities Revenues Expenses Income August 1: Activity Accounts Statement(s) Balance Sheet Income Statement Net Stockholders' Equity Assets Liabilities Revenues Expenses Income August 1: Activity Accounts Statement(s)