The following elements ofstockholders' equity are from the balance sheet of Smith Marketing Corp. at December 31, 2017:

Smith paid no preferred dividends in 2017.

Data Table

Stockholders' Equity

Paid-In Capital:

Preferred Stock4%, $2 Par Value; 150,000 shares authorized, 40,000 shares issued and outstanding $80,000

Common Stock$0.10 Par Value; 11,250,000 shares authorized, 10,500,000 shares issued and outstanding

1,050,000

Requirements

1.Compute the dividends to the preferred and common shareholders for 2018 if total dividends are $195,000 and assuming the preferred stock is noncumulative. Assume no changes in preferred and common stock in 2018.

2.Record the journal entries for 2018 assuming that Smith Marketing Corp. declared the dividends on July 1 for stockholders of record on July 15. Smith paid the dividends on July 31.

Smith's 2018 dividend would be divided between preferred and common stockholders in thismanner:

Total Dividend2018

Dividend to preferred stockholders:

Dividend in arrears

Current year dividend

Total dividend to preferred stockholders

Dividend to common stockholders