Question

Roadway Freight Corp. on June 10 declared a cash dividend of 50 cents a share on 1.8 million shares payable July 16 to all stockholders of record June 24. What is the journal entry for date of payment?

Answer 1

The journal entry for Roadway Freight Corp.'s cash dividend payment on July 16 consists of a debit to Dividends Payable and a credit to Cash, reflecting the distribution of $900,000 to shareholders.

Step-by-step explanation:

The question refers to the journal entry that should be made for a cash dividend payment by Roadway Freight Corp. on the date of payment, which is July 16.

The journal entry to record the payment of the dividend on the date it is payable (July 16) would be a debit to Dividends Payable and a credit to Cash. This reflects the cash outflow from the company as it distributes the dividend to its shareholders.

The entry on July 16 would be as follows:

• Debit Dividends Payable for the total amount to be paid out (1.8 million shares x $0.50 per share = $900,000).
• Credit Cash for the same amount ($900,000).

This entry will decrease both the Dividends Payable and Cash accounts on Roadway Freight Corp.'s balance sheet, signifying that a liability has been settled with cash.