value: 0.37 points M11-7 Determining the Amount of a Dividend LO 11-3] Netpass C

Question

value: 0.37 points M11-7 Determining the Amount of a Dividend LO 11-3] Netpass Company has 400,000 shares of common stock authorized, 360,000 shares issued, and 160,000 shares of treasury stock. The company's board of directors declares a dividend of $2.00 per share of common stock.What is the total amount of the dividend that will be paid? end Amount to be Paid References eBook &Resources; Worksheet Difficulty: 1 Easy M11-7 Determining the Amount of a Dividend [LO 11- 3] Leaming Objective: 11-03 Explain and analyze cash dividends, stock dividends, and stock split transactions 0 a F3 FI F2 8 4

Explanation / Answer

a) Calculate Total amount of dividend :

Total amount dividend = (360000-160000)*2 = 400000

b) Calculate maximum amount of net share = (320000-220000-22000) = 78000

c) Journal entry :

Date accounts & explanation debit credit Retained earnings a/c (100000*50%*1) 50000     Common stock distributable 50000

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