Question

Hutter Corporation declared a $0.50 per share cash dividend on its common shares. The company has 33,000 shares authorized, 16,800 shares issued, and 13,200 shares of common stock outstanding. The journal entry to record the dividend declaration is:a. Deblt Retained Earnings $6.600: credit Common Dividends Payable $6.600. b. Debrt Common Diwidends Payable $6.600. credit Cesh $6.600 c. Debit Retained Earnings $8.400 credit Common Dividends Payable $8.400 d. Debit Common Dividends Payable $8.400: credit Cash $8,400 e. Debit Retained Earnings $16.500: credit Common Dividends Payable $16,500

Answer 1

Answer: a. Debit Retained Earnings $6.600: credit Common Dividends Payable $6.600

Step-by-step explanation:

The Dividends to be paid are;

= dividend * common stock outstanding

= 0.5 * 13,200

= $6,600

When dividends are simply declared, the Retained earnings will be debited by the dividend amount because dividends come from Retained earnings.

The dividends will be credited to a liability account to show that the company owes its shareholders some dividends. The liability account is called the Common Dividends Payable account.