Steeltrap Security Inc. included the following shareholders' equity on its balance sheet at December 31, 2014:

Shareholders' Equity		($ Millions)
	Preferred Shares:
	Authorized 75,000 shares in each class :
	$3.00 Cumulative Preferred Shares, 2,200 shares issued. . . . .	$132,000
	$4.50 Cumulative Preferred Shares, 4,000 shares issued. . . . .	80,000
	Common Shares:
	Authorized 150,000 shares, issued 48,100 shares. . . . . . . . . . .	481,000
	Retained earnings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	529,000
		$1,222,000

Requirement 1. Identify the different issues of shares Steeltrap Security has outstanding.

Requirement 2. What was the value at which the $4.504.50 Cumulative Preferred Shares were issued? Steeltrap Security issued the $4.504.50 Cumulative Preferred Shares at $________.

Requirement 3. Suppose Steeltrap passed its preferred dividends for one year. Would the company have to pay these dividends in arrears before paying dividends to the common shareholders? Why?

Steeltrap WOULD / WOULD NOT have to pay preferred dividends in arrears before paying dividends to the common shareholders because the preferred shares are CONVERTIBLE / CUMULATIVE / NON- CUMULATIVE.

Requirement 4. What amount of preferred dividends must Steeltrap declare and pay each year to avoid having preferred dividends inarrears?

Steeltrap must declare and pay preferred dividends of $_____ each year to avoid having preferred dividends in arrears.

Requirement 5. Assume preferred dividends are in arrears for 2013. Journalize the declaration of a

$90,000 cash dividend for 2014.

No explanation is needed. (Record debits first, then credits. Explanations are not required.)

Journal Entry
Date		Accounts	Debit	Credit