5 value: 15.00 points The annual report for Sneer Corporation disclosed that the

Question

5 value: 15.00 points The annual report for Sneer Corporation disclosed that the company declared and paid preferred dividends in the amount of $260,000 in the current year. It also declared and paid dividends on common stock in the amount of $1.40 per share. During the current year, Sneer had 1 million common shares authorized; 460,000 shares had been issued; and 244,000 shares were in treasury stock. The opening balance in Retained Earnings was $740,000 and Net Income for the current year was $240,000 Required 1. Prepare journal entries to record the declaration, and payment, of dividends on (a) preferred and (b) common stock. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.) View transaction list Journal entry worksheet 2 4 Record the declaration of a cash dividend of $260,000 to the preferred stockholders Note: Enter debits before credits Transaction General Journal Debit Credit Record entry Clear entry View general journal

Explanation / Answer

Answer 1-a Journal Entry to record the declaration of a cash dividend of $260000 to the preferred stockholders Transaction General Journal Debit Credit a(1) Retained Earnings $260,000 Dividend Payable to Preferred stockholders $260,000 Answer 1-b Journal Entry to record the declaration of a cash dividend of $302400 to the common stockholders Transaction General Journal Debit Credit b(1) Retained Earnings $302,400 Dividend Payable to Common stockholders $302,400 No.of common stock shareholders eligible to receive dividend = Shares issued - Shares in Treasury stock = 460000 shares - 244000 shares = 216000 shares Cash dividend to Common stockholders = 216000 shares outstanding * $1.40 per share = $3,02,400 Answer 2 Statement of Retained Earnings for the year ended December 31 SNEER CORPORATION Statement of Retained Earnings   For the Year ended December 31 Retained Earnings , January 1 $740,000 Add : Net Income for the Current Year $240,000 Less : Dividend Declared to Common and Preferred stockholders $562,400 Retained Earnings , December 31 $417,600 Answer 3 Journal Entry to close the dividend account Transaction General Journal Debit Credit 1 Dividend Payable to Preferred stockholders $260,000 Dividend Payable to Common stockholders $302,400 Cash $562,400

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