Graves Mining Company declared, on April 20, a dividend of $548,900 payable on J
ID: 2422555 • Letter: G
Question
Graves Mining Company declared, on April 20, a dividend of $548,900 payable on June 1. Of this amount, $131,400 is a return of capital. Prepare the April 20 and June 1 entries for Graves. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)
Date
Account Titles and Explanation
Debit
Credit
Apr. 20
June 1
Date
Account Titles and Explanation
Debit
Credit
Apr. 20
June 1
Explanation / Answer
The amount of dividend declared will be adjusted against additional paid in capital/paid in capital in excess of par upto the value of return on capital, that is for an amount of $131,400. The remaining amount of dividends payable $417,500 (548,900 - 131,400) will be adjusted against retained earnings. The total amount of dividend will be paid in cash on June 1. The journal entries for both the dates are given below:
Date Account Titles and Explanation Debit Credit 20 April Retained Earnings (548,900 - 131,400) $417,500 Additional Paid in Capital/Paid in Capital in Excess of Par – Common Stock $131,400 Dividends Payable $548,900 01June Dividends Payable $548,900 Cash $548,900Related Questions
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