Ehrlich Corporation has the following capital structure at the beginning of the year:

5% Preferred stock, $100 par value, 20,000 shares authorized,

6,000 shares issued and outstanding $ 600,000

Common stock, $10 par value, 60,000 shares authorized,

40,000 shares issued and outstanding 400,000

Paid-in capital in excess of par 110,000

Total paid-in capital 1,110,000

Retained earnings 540,000

Total stockholders' equity $1,650,000

Instructions

Record the following transactions (show all calculations).

1. The board of directors approved a $95,000 cash dividend for the preferred and common stockholders. Record the journal entries for the declaration and the payment of the dividend.

2. A 15% common stock dividend was declared. The average fair value of the common stock is $23 a share. Prepare the journal entry for the declaration of the dividend and for the distribution of the stock.