Cash Dividends Rock Corporation has the following shares outstanding: 8.000 shar

Question

Cash Dividends Rock Corporation has the following shares outstanding: 8.000 shares of $40 par value, ten percent preferred stock and 50.000 shares of $2 par value common stock. The company has $428.000 of retained earnings. At year-end, the company declares its regular $4 per share cash dividend on the preferred stock and a $3,20 per share cash dividend on the common stock. Two weeks later, the company pays the dividends a. Prepare the journal entry for the declaration of the cash dividends. b. Prepare the journal entry for the payment of the cash dividends. General Journa Ref. Description Debit Credit Dividends payable- Preferred stock To record declaration of cash dividend b. Dividends payable Common stock To record payment of dividends

Explanation / Answer

Ref Description Debit Credit a. Retained earnings 132,000 Dividends payable -PS (8000*4) 32000 dividends payable-CS (50000*2) 100000 b Dividends payable -PS 32,000 Dividends payable -common stock 100,000 Cash 132,000 forward stock split 500,000*2 = 1000000 shares at 10 par value a) 1000000 shares b) Balance in common Stock 10,000,000 c) Balance in paid in capital 3,400,000

Related Questions

Navigate

• Browse (All)
• Browse C
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.