Company C was established two years ago by issuing 3,000,000 common shares at $8 per share, and 2,000,000 preferred shares at $8 per share. The preferred shares are cumulative with the stated dividend rate of 2%. During 2019, the company declared the total amount of $2,000,000 cash dividend. The company did not declare dividends in the past two years. Preferred shares are fully participating.

Required:

(a) Complete the following calculation of the dividend distribution to preferred and common shareholders.

	Preferred Shares	Common Shares	Total
Dividend in arrears		N/A	N/A
Current years dividend based on the stated dividend rate			N/A
Participating dividend			N/A
Totals			$2,000,000

(b) Prepare the journal entry to record the declaration of $2,000,000 cash dividend.