Question

Greentea Company earned a net income of $ 95,000 during the year ended December ​31, 2018. On December ​15, Greentea declared the annual cash dividend on its 6​% preferred stock​ (par value, $128,000​) and a ​$1.00 per share cash dividend on its common stock (52,000 ​shares). Greentea then paid the dividends on January ​4, 2019.
Requirements:
1. Journalize for Java the entry declaring the cash dividends on December 15, 2018.
2. Journalize for Java the entry paying the cash dividends on January 4, 2019.

Answer 1

Answer:

Explanation:

The journal entries are shown below:

1. Retained earnings A/c Dr $59,680

             To Dividend payable A/c $59,680

(Being the declaration of the cash dividend is recorded)

The computation is shown below:

= Preferred stock × cash dividend percentage + common stock shares × cash dividend per share

= $128,000 × 6% + 52,000 shares + $1

= $7,680 + $52,000

= $59,680

2. Dividend payable A/c Dr $59,680

                To Cash A/c $59,680

(Being the dividend is paid for cash)