Derek Corporation Was Organized on January 1, 2013

Essay

Derek Corporation was organized on January 1, 2013. During its first year, the corporation issued 40,000 preference shares with a $5 par value and 400,000 ordinary shares with a $1 par value. At December 31, the company declared the following cash dividends: Instructions
(a) Show the allocation of dividends to each class of shares, assuming the preference shares dividend is 4% and not cumulative.
(b) Show the allocation of dividends to each class of shares, assuming the preference shares dividend is 5% and cumulative.
(c) Journalize the declaration of the cash dividend at December 31, 2015 using the assumption of part (b).