Question

Bridgeport Corporation has 10.40 million shares of common stock issued and outstanding. On June 1, the board of directors voted an 74 cents per share cash dividend to stockholders of record as of June 14, payable June 30.A.Prepare the journal entry for each of the dates above assuming the dividend represents a distribution of earnings. B.How would the entry differ if the dividend were a liquidating dividend?

Answer 1

Step-by-step explanation:

The journal entries are as follows

On June 1

Retained earning Dr $7,696,000 ($10400000 × 0.74)

To Dividend payable $7,696,000

(Being the dividend is declared)

On June 14

No journal entry is required

On June 30

Dividend payable Dr $7,696,000

To Cash $7,696,000

(Being the dividend is paid)

Now the another entry is

Additional paid in capital In excess of par $7,696,000

To Dividend payable $7,696,000

(Being the liquidating dividend is recorded)