Question

On February 5, 2018, Cinch Rental Corporation's board of directors declared a dividend of $0.35, to be paid on March 18, 2018, to the shareholders of record as of the close of business on March 9, 2018. Cinch has 6,200,000 shares of $0.01 par-value common stock authorized with 900,000 shares issued and outstanding. The company has no preferred stock.
Required:
Record the declaration of the explanations from any journal entries) dividend and the payment of the dividend.

Answer 1

Answer:

Feb 5

Dr Cash dividend (900,000 shares*.35) 315,000

Cr Dividend payable 315,000

Mar 18

Dr Dividend payable 315,000

Cr Cash 315,000

Explanation:

Preparation of the Journal entry to Record the declaration of the payment of the dividend.

Based on the information given we were told that the on Feb 5 the board of directors declared dividend of the amount of $0.35, which is to be paid on March 18 including 900,000 shares that was issued and outstanding which means that the company Journal entries will be:

Feb 5

Dr Cash dividend (900,000 shares*.35) 315,000

Cr Dividend payable 315,000

Mar 18

Dr Dividend payable 315,000

Cr Cash 315,000