A company reported stockholders\' equity on January 1 of the current year as fol

Question

A company reported stockholders' equity on January 1 of the current year as follows: Common Stock, $5 par value, 1,000,000 shares authorized, 600,000 shares issued; Paid-in Capital in Excess of Par Value, Common Stock, $1,025,000; Retained Earnings, $2,850,000. Prepare journal entries to record the following transactions:

May 1:  A cash dividend of $1.10 per common share was declared by the board of directors to stockholders of record on May 20, payable June 1.

May 20: The date of record.

June 1: Paid the cash dividend.

Explanation / Answer

Dividend declared Dr. 660000

Dividend payable Cr. 660000

May 20 Dividend Dr. 660000

Dividend payable Cr. 660000

June1 Dividend Paid Dr. 660000

Cash Cr. 660000

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