Answer:
The correct entry is:
Dr Retained Earnings 15,300
Cr Preferred stock - Dividend payable 650
Cr Common stock - Dividend payable 14,650
(to record the declaration of $15,300 dividend payment to 650 preferred stocks and 1,800 common stocks)
Explanation:
Please find the detailed calculations which are shown as below:
Dividend paid to preferred stocks = Number of preferred stocks outstanding x interest rate in preferred stock x par value of preferred stock = 650 x 1% x 100 = $650 .
Dividend paid to common stocks = Total Dividend paid declaration - Dividend paid to preferred stocks = 15,300 - 650 = $14,650 .
