Question

fetzer company declared a $0.55 per share cash dividend. the company has 480,000 shares authorized, 456,000 shares issued, and 19,200 shares in treasury stock. the journal entry to record the dividend declaration is:

Answer 1

Debit Retained Earnings $250,800; credit Common Dividends Payable $250,800

What is a dividend?

A dividend is the distribution of profits to shareholders by a corporation. When a corporation makes a profit or has a surplus, it has the option of paying a portion of that profit as a dividend to its shareholders. Any money that is left over is taken out and put back into the business.

The total dividend is divided by the number of outstanding shares to determine the dividend per share.

A corporation may choose to disperse a portion of its income in one of four different ways. Your monthly brokerage statement may include information about dividends paid on CASH, STOCK, HYBRID, or PROPERTY investments.

Shares issued= 456,000

Per share cash dividend = $0.55

Dividends Payable = 456,000 x $0.55 = $250,800

Debit Retained Earnings $250,800, credit Common Dividends Payable $250,800

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