Question

Marigold Corp. has 7,800 shares of common stock outstanding. It declares a $1 per share cash dividend on November 1 to stockholders of record on December 1. The dividend is paid on December 31. Prepare the entries on the appropriate dates to record the declaration and payment of the cash dividend

Answer 1

Answer:

Nov 1.

Upon announcing the Dividend

No entry required . as the register closes Dec 1.

Dec 1.

At the point of declaration :

Debit Dividend Account with $7,800

Credit Dividend Payable with $7,800

Dec 31.

At the point of payment

Debit Dividend Payable account with $7,800

Credit Cash Account with $7,800

Answer 2

Answer:

November 1

Dividend $7,800 (debit)

Shareholders for Dividends  $7,800 (credit)

December 31

Shareholders for Dividends  $7,800 (debit)

Cash $7,800 (credit)

Explanation:

November 1

Dividend $7,800 (debit)

Shareholders for Dividends  $7,800 (credit)

Recognize an Equity Item - Dividend and also recognize a liability - Shareholders for Dividends

December 31

Shareholders for Dividends  $7,800 (debit)

Cash $7,800 (credit)

De-recognize the Liability-Shareholders for Dividends and also de-recognize the Cash Asset