Question

Divine Apparel has 2,300 shares of common stock outstanding. On October 1, the company declares a $0.25 per share dividend to stockholders of record on October 15. The dividend is paid on October 31.

Record all transactions on the appropriate dates for cash dividends. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

1. Record the declaration of cash dividends.

2. Record the entry on date of record.

3. Record the payment of cash dividends.

Answer 1

1. Record the declaration of cash dividends.

October 1, cash dividends are declared.

Dr Retained earnings 575

Cr Dividends payable 575

A liability is formed on the date of declaration.

2. Record the entry on date of record.

No journal entry is required

3. Record the payment of cash dividends.

October 31, dividends are paid.

Dr Dividends payable 575

Cr Cash 575