Question

A corporation declares a $0.10 per share cash dividend on 30,000 shares of

would be
common stock. On the date of declaration, a debit for
journalized.
A. $1,500
B. $3,000
C. $2,500
D. $6,000
SUBMIT

Answer 1

The amount of the cash dividend is $0.10 per share, and there are 30,000 shares of common stock. Therefore, the total amount of the dividend is:

$0.10 per share x 30,000 shares = $3,000

When a corporation declares a dividend, it creates a liability for the company. The entry to record the declaration of the dividend would be:

Debit: Retained Earnings - $3,000
Credit: Dividends Payable - $3,000

Therefore, the correct answer is B. $3,000.