Problem 2. On January 1 Weiss Corporation had 75,000 shares of no-par common sto

Question

Problem 2. On January 1 Weiss Corporation had 75,000 shares of no-par common stock issued and outstanding The stock has a stated value of $5 per share. During the year, the following transactions occurred. Apr. 1 June 15 July 10 Dec. 1 Issued 8,000 additional shares of common stock for $11 per share. Declared a cash dividend of $1.50 per share to stockholders of record on June 30 Paid the $1.50 cash dividend. Issued 4,000 additional shares of common stock for $12 per share. Declared a cash dividend on outstanding shares of $1.70 per share to stockholders of record on December 31. 15 Instructions (a) Prepare the entries, if any, on each of the three dates that involved dividends. (b) How are dividends and dividends payable reported in the financial statements prepared at December 31?

Explanation / Answer

In the financial statements, dividends of $272,400 will be reported in the statement of retained earnings for the financial statement prepared at December31.

In the balance sheet, Dividends Payable of $147,900 will be reported as a current liability.

Date Particulars Debit Credit Jun-15 Retained Earnings (83,000 x $1.50) $124,500      To Dividends Payable $124,500 Jul-10 Dividends Payable $124,500       To Cash $124,500 Dec. 15 Retained Earnings (87,000 x $1.70) $147,900       To Dividends Payable $147,900

In the financial statements, dividends of $272,400 will be reported in the statement of retained earnings for the financial statement prepared at December31.

In the balance sheet, Dividends Payable of $147,900 will be reported as a current liability.

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