Question
Knudsen Bakeries was organized on January 1, 2019. During its first year, the company issued 2,000 shares of HK$50 par value preference shares and 100,000
Knudsen Bakeries was organized on January 1, 2019. During its first year, the company issued 2,000 shares of HK$50 par value preference shares and 100,000 shares of HK$10 par value ordinary shares. At December 31, the company declared the following cash dividends: 2019, HK$5,000; 2020, HK$12,000; and 2021, HK$28,000 (HK$ in thousands).
Allocate cash dividends to preference and ordinary shares.
Instructions
a.Show the allocation of dividends to each class of shares, assuming the preference share dividend is 6% and non-cumulative.
b.Show the allocation of dividends to each class of shares, assuming the preference share dividend is 7% and cumulative.
c.Journalize the declaration of the cash dividend at December 31, 2021, under part (b).
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