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28 August, 16:30

On January 1 Weiss Corporation had 60,000 shares of no-par common stock issued and outstanding. The stock has a stated value of $5 per share. During the year, the following transactions occurred:

Apr. 1 Issued 10,000 additional shares of common stock for $10 per share.

June 15 Declared a cash dividend of $1.00 per share to stockholders of record on June 30.

July 10 Paid the $1.00 cash dividend.

Dec. 1 Issued 4,000 additional shares of common stock for $12 per share.

Dec 15 Declared a cash dividend on outstanding shares of $1.00 per share to stockholders of record on December 31.

Required:

a. Prepare the entries, if any, on each of the three dates that involved dividends.

b. How are dividends and dividends payable reported in the financial statements prepared at December 31?

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Answers (1)
  1. 28 August, 17:30
    0
    a. The journal entries are as follows

    On June 15

    Retained earning A/c Dr $60,000

    To Dividend payable $60,000

    (Being cash dividend declared)

    On June 30

    No journal entry is required

    On June 10

    Dividend payable $60,000

    To Cash $60,000

    (Being the dividend is paid)

    On Dec 15

    Retained earning A/c Dr $64,000

    To Dividend payable $64,000

    (Being cash dividend declared)

    On Dec 31

    No journal entry is required

    b. Now the dividend is reported on the retained earning statements in a negative sign whereas the dividend payable is reported on the current liabilities of the balance sheet
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