Derek Corporation was organized on January 1, 2007. During its first year, the corporation issued 40,000 shares of $5 par value preferred stock and 400,000 shares of $1 par value common stock. At December 31, the company declared the following cash dividends:
2007....................................$10,000
2008....................................$30,000
2009....................................$70,000
(a) Show the allocation of dividends to each class of stock, assuming the preferred stock dividend is 6% and not cumulative.
(b) Show the allocation of dividends to each class of stock, assuming the preferred stock dividend is 8% and cumulative