Question

On August ​1, Hagino Corporation declared a ​$1.50 per share cash dividend on its common stock ​(20 comma 000 ​shares) for stockholders on record as of August 15. Hagino paid the dividend on August 31. Journalize the entries declaring the cash dividend and paying the dividend

Answer 1

Hagino Corporation must make two journal entries for the dividend process: one for declaring a $1.50 per share cash dividend on August 1, and another for paying that dividend on August 31. The declaration entry debits Dividends Declared and credits Dividends Payable, while the payment entry debits Dividends Payable and credits Cash.

Step-by-step explanation:

When Hagino Corporation declared a $1.50 per share cash dividend on its common stock for stockholders of record as of August 15, and paid this dividend on August 31, two separate journal entries are required to record these transactions in the company's books. Below are the journal entries:

Entry for Declaring the Dividend on August 1

Date: August 1
Account: Dividends Declared
Debit: $30,000 (20,000 shares x $1.50/share)
Account: Dividends Payable
Credit: $30,000

This journal entry recognizes the company's obligation to pay the declared dividend.

Entry for Paying the Dividend on August 31

Date: August 31
Account: Dividends Payable
Debit: $30,000
Account: Cash
Credit: $30,000

This journal entry reflects the actual payment of dividends, reducing both the Dividends Payable and Cash accounts.

Answer 2

The entries declaring the dividends are as follows:

Dr Retained earnings $30,000

Cr Dividends payable $30,000

Being declaration of $1.50 dividend per share

The entries upon payment of dividends:

Dr Dividends payable $30,000

Cr Cash $30,000

Being payment of dividends

Step-by-step explanation:

The actual dividends declared is $30,000($1.5*20000 shares)

Upon declaration of the dividends the retained earnings is debited with $30,000 as the dividends are taken from retained profits in the business, with the obligation of dividends credited to dividends payable account,

Upon, dividends payable account is debited and actual outflow of cash is credited to cash account.