(2) Royal Company is currently considering declaring a dividend to its common sh
ID: 2520941 • Letter: #
Question
(2) Royal Company is currently considering declaring a dividend to its common shareholders, according to one of the following plans: Declare a cash dividend of S15 per share Declare a 10% stock dividend. Royal Company would distribute one share of common stock for every 10 shares. The company's common stock is currently selling for $50 per share 1. 2. Royal Company is authorized to issue 100,000 shares of S10 par value common stock. To date, the company has issued 55,000 shares and currently holds 8,000 shares in treasury stock. Required: How many shares of common stock are eligible to receive a dividend? Prepare the entries necessary on the date of declaration, date of record, and date of payment for the cash dividend. Prepare the entry to record the stock dividend, assuming that the dividend is declared and issued on the same date. a. b. c.Explanation / Answer
a) Shares of common stock are eligible to receive a dividend = (55000-8000)*10% = 4700 shares
b) Journal entry :
c) Journal entry :
188000
Date accounts & explanation debit credit Cash dividend (55000-8000)*15 705000 Dividend payable 705000 (To record dividend declaration) No entry Dividend payable 705000 Cash 705000 (To record dividend paid)Related Questions
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