Question

The declaration, record, and payment dates in connection with a cash dividend of $135,000 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, select "No Entry Required" and leave the amount boxes blank.

Answer 1

Declaration:

Dr retained earnings $135,000

Cr dividends payable $135,000

Record date:

no entries are required

Payment date:

Dr dividends payable $135,000

Cr cash $135,000

Step-by-step explanation:

The declaration implies that an amount is set aside from retained earnings in order to pay dividends to stockholders,which means that retained earnings is debited with $135,000 while dividends payable is credited with the same amount.

On payment date,the cash account would show a credit,an outflow while dividends payable is debited with $135,000 in order to show that the dividends obligation has been discharged