The board of directors of Capstone Inc. declared a $.90 per share cash dividend

Question

The board of directors of Capstone Inc. declared a $.90 per share cash dividend on its $1 par common stock. On the date of declaration, there were 43,000 shares authorized, 16,000 shares issued, and 5,000 shares held as treasury stock. What is the entry for the dividend declaration?

The board of directors of Capstone Inc. declared a $.90 per share cash dividend on its $1 par common stock. On the date of declaration, there were 43,000 shares authorized, 16,000 shares issued, and 5,000 shares held as treasury stock. What is the entry for the dividend declaration?

Explanation / Answer

Shares = 16000-5000 = 11000 shares

Dividend = 11000*$0.90 = $9900

Retained earnings 9900

Common dividends payable. 9900

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