Question

Following is a recent BusinessSoftware Corp. press release: REDMOND, Wash.—March 16, 2016 — BusinessSoftware Corp. today announced that its board of directors have declared a quarterly dividend of $0.18 per share. The dividend will be payable on June 9, 2016, to shareholders of record on May 19, 2016. The ex-dividend date will be May 17, 2016 Prepare the journal entries BusinessSoftware Corp. used to record the declaration and payment of the cash dividend for its 8,600 million shares.

Answer 1

Answer:

Explanation:

1. The journal entry for declaration of dividend is shown below:

Retained Earnings A/c Dr

= (8,600 million shares × $0.18 per share) = $1,548 million

          To Dividend payable in cash                                         $1,548 million

(Being dividend is declared)

2. No journal entry should be passed on the record date

3. The journal entry for payment of the cash dividend is shown below:

Cash dividend payable A/c Dr     $1,548 million

      To Cash                                                              $1,5480 million

(Being payment is made for cash dividend)