Question

Weaver Corporation had the following stock issued and outstanding at January 1, Year 1:

1. 70,000 shares of $14 par common stock.
2. 7,500 shares of $100 par, 7 percent, non-cumulative preferred stock.
On June 10, Weaver Corporation declared the annual cash dividend on its 7,500 shares of preferred stock and a $2 per share dividend for the common shareholders. The dividends will be paid on July 1 to the shareholders of record on June 20.
Prepare general journal entries to record the declaration and payment of the cash dividends.

Answer 1

Preferred shareholder (7,500*$100)*7% $52,500

Common shareholder (70,000×$2) $140,000

Total dividend $192,500

Date General Journal Debit Credit

10 June Dividend $192,500

To dividend payable $192,500

(To record dividends payable)

20 June No entry required

01 July Dividend payable $192,500

To cash $192,500

(To record dividend payment)

31 Dec Retained earning $192,500

To dividends $192,500

(To close dividend account)