eBook Print Question 4 Answer saved Marked out of 16.67 Flag question Identifying and Analyzing Financial Statement Effects of Cash Dividends Freid Corp. has outstanding 6,000 shares of $50 par value, 6% preferred stock, and 40,000 shares of $1 par value common stock. The company has $328,000 of retained earnings. At year-end, the company declares and pays the regular $3 per share cash dividend on preferred stock and a $2.20 per share cash dividend on common stock. a. Using the financial statement effects template, illustrate the effects of these two dividend payments. Use a negative sign with your answers, when appropriate. Balance Sheet Income Statement Noncash Contrib. Earned Transaction Cash Asset + Asset Liabilities + Capital Capital Revenues - Expenses - Net Income 12/31 Declared and paid cash dividend on preferred stock $ 0 + $ 0 = $ 0 + $ 0 + $ 0$ 0 - $ 0 = $ 12/31 Declared and paid cash dividend on common stock + 0 + 0 0 + 0 = 0 + 0 + 0 0 0 = b. Prepare the journal entries for the two dividend payments. Date Description Debit Credit (1) 12/31 Retained earnings 1 18,000 0 Preferred stock 0 18,000 Record preferred dividend (2) 12/31 Retained earnings 2 88,000 0 Common stock . 0 88,000 Record common dividend c. Post the journal entries from b to the related T-accounts. Cash (A) Retained Earnings (SE) (1) 12/31 0 18,000 (1) 12/31 18,000 0 (2) 12/31 0 88,000 (2) 12/31 88,000 0