Question - West Inc. 1,000 shares of $100 par value, 3% cumulative preferred stock outstanding. During 2007, West's first year of operations, the company lost money and did not pay dividends. However, during 2008, West earned a profit of $500,000. The board of directors authorized up to $10,000 of this profit could be paid out in dividends.
What is the journal entry to record West's payment of dividends on it preferred stock?