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Old McDonald had a pig farm. MacDonald Farm Products (MFP) was created on January 1,...

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Accounting

Old McDonald had a pig farm. MacDonald Farm Products (MFP) was created on January 1, 2019 with unlimited authorized common shares. On Jan 2, 2019, MFP issued and sold 60000 common shares for $6 each. Also on Jan 2, 2019, MFP issued and sold 10000, $2 noncumulative preferred shares for $10 each. MFP issued and sold another 10000 common shares on Sept 1, 2019 for $8 each. Profit for 2019 was zero; the company broke even and decided it would not be prudent to declare dividends. 2020 was a much better year. Year-end (December 31) showed $80000 profit (the profit is currently in "income summary", so include the closing entry in your answer). On Dec 31, 2020, MFP declared a $40000 cash dividend payable on January 31, 2021 to shareholders of record on January 20. Required: al Prepare all necessary journal entries for the above transactions, from Jan 2, 2019 to Jan 31, 2021. (There should be 6 entries in total, and show your workings for the dividend calculation.) b) How would the dividend have been allocated if the preferred shares were cumulative instead of noncumulative ?

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