Answer:
1. Dr Cash$510,000
Cr Preferred stock, $100 par value $500,000
Cr Paidin capital in excess of par value, preferred stock $10,000
2. $35,000
Explanation:
Preparation of journal entry
1. Preparation of the journal entry to record Tamas Company's issuance
Dr Cash$510,000
(5,000 × $102)
Cr Preferred stock, $100 par value $500,000
(5,000 × $100 )
Cr Paidin capital in excess of par value, preferred stock $10,000
($510,000 – $500,000 )
(Being to record issuance of 5,000 shares of $100 par value)
2. Calculation for the amount of dividend paid to preferred shareholders
Preferred dividend = $100 par value × 7% × 5,000 shares
Preferred dividend = $35,000
Therefore the amount of dividend paid to preferred shareholders will be $35,000
