*Exercise 11-5 Hodge Corporation issued 100,000 shares of $20 par value, cumulat

Question

*Exercise 11-5 Hodge Corporation issued 100,000 shares of $20 par value, cumulative, 6% preferred stock on January 1, 2018, for $2,300,000. In December 2020, Hodge declared its first dividend of $500,000. Prepare Hodge's journal entry to record the issuance of the preferred stock. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Account Titles and Explanation Debit Credit If the preferred stock is not cumulative, how much of the $500,000 would be paid to common stockholders? Common Stock Dividends If the preferred stock is cumulative, how much of the $500,000 would be paid to common stockholders? Common Stock Dividends s s

Explanation / Answer

Cash 2300000       Preferred stock 2000000       Paid in capital in excess of par 300000 2 Annual preferred dividends = 2000000*6% = 120000 Common stock dividends = 500000-120000 = 380000 3 Common stock dividends = 500000-(120000*3) = 140000

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