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.

Income Statement Noncash Asset Balance Sheet Contrib. Liabilities + Capital + $ Earned Capital + Revenues Expenses Transaction Cash Asset + 12/31 Declared and paid cash dividend on preferred stock $ 12/31 Declared and paid cash dividend on common stock = Net Income + $ + $ $ $ = $ + + + b. Prepare the journal entries for the two dividend payments. Date Description Debit Credit (1) 12/31 Retained earnings A Preferred stock Record preferred dividend (2) 12/31 Retained earnings Common stock - Record common dividend C. Post the journal entries from b to the related T-accounts. Cash (A) Retained Earnings (SE) (1) 12/31 (1) 12/31 (2) 12/31 (2) 12/31