Nowell Inc. had the following stock issued and outstanding at January 1, 2016:
1. 150,000 shares of no-par common stock.
2. 30,000 shares of $50 par, 4 percent, cumulative preferred stock. (Dividends are in arrears for one year, 2015.)
On March 8, 2016, Nowell declared a $175,000 cash dividend to be paid March 31 to shareholders of record on March 20.
a. What amount of dividends will be paid to the preferred shareholders versus the common shareholders?
b. Prepare the journal entries required for these transactions.