The books of Conchita Corporation carried the following

account
The books of Conchita Corporation carried the following account balances as of December 31,
2010.The company decided not to pay any dividends in 2010. The board of directors, at their
annual meeting on December 21, 2011, declared the following: “The current year dividends
shall be 6% on the preferred and $.30 per share on the common. The dividends in arrears shall
be paid by issuing 1,500 shares of treasury stock.” At the date of declaration, the preferred is
selling at $80 per share, and the common at $12 per share. Net income for 2011 is estimated at
$77,000.(a) Prepare the journal entries required for the dividend declaration and payment,
assuming that they occur simultaneously.(b) Could Conchita Corporation give the preferred
stockholders 2 years’ dividends and common stockholders a 30 cents per share dividend, all
incash?View Solution:
The books of Conchita Corporation carried the following account
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