On January 1, Guillen Corporation had 95,000 shares of no-par common stock issued and outstanding. The stock has a stated value of $5 per share. During the year, the following occurred.

Apr. 1 Issued 25,000 additional shares of common stock for $17 per share.

June 15 Declared a cash dividend of $1 per share to stockholders of record on June 30.

July 10 Paid the $1 cash dividend.

Dec. 1 Issued 2,000 additional shares of common stock for $19 per share.

15 Declared a cash dividend on outstanding shares of $1.2 per share to stockholders of record on December 31.

(b)

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

Question

Bailey Terry

Business

30 November, 22:46

On January 1, Guillen Corporation had 95,000 shares of no-par common stock issued and outstanding. The stock has a stated value of $5 per share. During the year, the following occurred.

Apr. 1 Issued 25,000 additional shares of common stock for $17 per share.

June 15 Declared a cash dividend of $1 per share to stockholders of record on June 30.

July 10 Paid the $1 cash dividend.

Dec. 1 Issued 2,000 additional shares of common stock for $19 per share.

15 Declared a cash dividend on outstanding shares of $1.2 per share to stockholders of record on December 31.

(b)

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

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Answers (1)

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Amiga · Answer 1

Date Description DR CR

June 15 Dividend expenses $120,000

Dividend Payable 120,000

July 10 Dividend Payable 120,000

Cash 120,000

Dec 15 Dividend Expenses 146, 400

Dividend payable 146,400

Explanation:

when dividend is declared and cash is yet to be paid, dividend expenses account will debited while dividend payable account will be credited.

when cash is paid for the dividend, dividend payable account will be credited while the cash account will be credited.

As at June 30, total number of shares outstanding = 95,000 + 25,000 = 120,000

As at December 31, the total number of outstanding shares = 95,000 + 25,000 + 2,000 = 122,000