Question

The declaration, record, and payment dates in connection with a cash dividend of $129,100 on a corporation’s common stock are January 12, March 13, and April 12. Journalize the entries required on each date. If no entry is required, simply skip to the next transaction. Refer to the Chart of Accounts for exact wording of account titles.

Answer 1

On the declaration date:

Dr Retained earnings $129,100

Cr Dividends payable $129,100

On payment date:

Dr Dividends payable $129,100

Cr Cash $129,100

Step-by-step explanation:

The declaration of $129,100 dividends requires that that obligation be recognized in the book of accounts by crediting dividends payable account and debiting retained earnings

On the record date no entries are required as recording only requires that certain documents are completed

However, on the payment date, the dividends payable account is debited and cash account credited