On November 23, Wheelhouse Entertainment declares a $180,000 dividend. Wheelhous
ID: 2372773 • Letter: O
Question
On November 23, Wheelhouse Entertainment declares a $180,000 dividend. Wheelhouse%u2019s common stock has a $6 par value and 65,000 shares outstanding. Its preferred stock is 4%, $11 par, and 30,000 shares outstanding. Cope did not pay dividends for two years prior to the current year. The dividend is to be paid on December 31.
a. Prepare the journal entries for the declaration and payment of the dividend if the preferred stock is cumulative. Hint: Determine the preferred stock payment first. Enter your answers in the shaded boxes.
b. Prepare the journal entries for the declaration and payment of the dividend if the preferred stock is noncumulative. Hint: Determine the preferred stock payment first. Enter your answers in the shaded boxes.
Explanation / Answer
a. Prepare the journal entries for the declaration and payment of the dividend if the preferred stock is cumulative. Hint: Determine the preferred stock payment first. Enter your answers in the shaded boxes.
Dividend A/c Dr $180,000
To Dividend payable a/c $180,000
( being dividend declared)
Dividend Payable a/c Dr $180,000
To preferece Shareholder {(30000*11*4%)*3 } $39600
To Equity Sharehoder $140,400
( dividend payable distributed)
Preferece Shareholder Dr $39600
Equity Sharehoder Dr $140,400
To bank $180,000
(being dividend paid)
b. Prepare the journal entries for the declaration and payment of the dividend if the preferred stock is noncumulative. Hint: Determine the preferred stock payment first. Enter your answers in the shaded boxes.
Dividend A/c Dr $180,000
To Dividend payable a/c $180,000
( being dividend declared)
Dividend Payable a/c Dr $180,000
To preferece Shareholder {(30000*11*4%)*1 } $13200
To Equity Sharehoder $166,800
( dividend payable distributed)
Preferece Shareholder Dr $13,200
Equity Sharehoder Dr $166,800
To bank $180,000
(being dividend paid)
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