Question

Lindy Corporation has 1,000,000 authorized shares of $20 par value common stock. As of June 30,2017 , there were 600,000 shares issued and outstanding. On June 30,2017 , the board of directors declared a 50.50 per share cash dividend to be paid on August 1 . 2017.

Prepare the necessary journal entries to be recorded on
(a) the date of declaration,
(b) the date of record, and
(c) the date of payment.
(If no entry is required, select "No Entry" for the occount titles and enter 0 for the amounts. Credit account titles are automotically indented when the omount is entered. Do not indent manually)

Answer 1

Journal entries for a cash dividend involve recording the liability on the declaration date, no entry on the record date, and reducing the liability while paying cash on the payment date. For Lindy Corporation's dividend of $0.50 per share on 600,000 shares, entry on declaration would debit Retained Earnings and credit Dividends Payable for $303,000, and on payment, debit Dividends Payable and credit Cash for the same amount.

Step-by-step explanation:

The student is asking about how to record the journal entries for a cash dividend declared and paid by Lindy Corporation on their common stock. The entries would be recorded on three different dates: the declaration date, the record date, and the payment date.

Date of Declaration (June 30, 2017)

Dr. Retained Earnings $303,000

Cr. Dividends Payable $303,000

Date of Record (No entry required)

No entry is necessary on this date as it is simply the date on which the company determines which shareholders on record will receive the dividend.

Date of Payment (August 1, 2017)

Dr. Dividends Payable $303,000

Cr. Cash $303,000

The dividend paid is $0.50 per share on 600,000 shares for a total dividend payment of $300,000.