RFC will issue 12,000 non-cumulative, convertible, preferred shares at $17.50 per share to friends and family. Each share will have a dividend right of $0.40 per share and is convertible into one common share after five years have passed (ie. not convertible until five years from the date of issue). Prior to this financing, RFC’s share capital consisted of: Robert and his family 55,000 common shares Lawrence Walters (Bob’s brother) 1,800 cumulative preferred shares, $0.30 dividend right All the current shares were issued when the company was formed five years. No dividends were paid for the prior two years, but were paid in full each year before that. Bob is expecting RFC to declare a $9,000 dividend on December 1st of the current year to be paid January 15th next year.

For this financing option, Bob would like to know the following: 

i. The journal entry for the issuance of the shares. 

ii. A calculation to determine how much of the declared dividend will go to the preferred and common shareholders, assuming the dividend does get declared. 

iii. All journal entries related to the dividend that would occur in the current year only, assuming the dividend does get declared. RFC uses separate ‘dividends declared’ accounts for each type of share (common, preferred), but uses only one ‘dividend payable’ account. Be sure to do the journal entry on December 31st to close out the ‘dividends declared’ account.