Answer:
For the declaration of cash dividends Sanders Corporation will credit dividends payable because it is a liability and we will debit retained earnings , because Sanders Corporation are using our retained earnings to pay the dividend.
preferred dividend = 7,000*3= $21,000
common stock dividend= 45,000*2.2=$99,000
Entries for declaration of dividend
Debit Credit
Retained Earnings 120,000
Preferred dividend payable 21,000
Common stock dividend payable 99,000
For recording the payment of cash dividend we will debit the dividend payables because when we pay the dividend the liability is finished, and we will credit cash because we are paying the dividends using cash and that is an asset that is decreasing so we will credit it.
Entries for payment of cash dividend
Debit Credit
Preferred dividend payable 21,000
Common stock dividend payable 99,000
Cash 120,000
Explanation:
