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%. In 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.

(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 year’s 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 the $2,000,000 cash dividend.