Question

On May 20, the board of directors for Auction declared a cash dividend of 50 cents per share payable to stockholders of record on June 14. The dividends are paid on July 14. The company has 502,000 shares of stock outstanding. Closing entries are recorded on July 31. Prepare any necessary journal entries for each date. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)A) May 20th, Record the entry on the date of declaration for a cash dividend of 50 cents per share payable on the 513,000 shares of stock outstanding.B) June 14th, Record the entry on the date of record for a cash dividend of 50 cents per share payable on the 513,000 shares of stock outstanding.C) July 14th, Record the entry on the date of payment for the cash dividend.D) July 31st, Record the entry to close the dividend account to retained earnings.

Answer 1

Answer:

Explanation:

The journal entries are shown below:

We assume the shares outstanding is 513,000 shares

On May 20

Dividend A/c Dr  $256,500        (513,000 shares × $0.50)  

      To Dividend payable A/c  $256,500  

(Being cash dividend declared)  

On June 14

No entry

On July 14

Dividend payable A/c Dr  $256,500  

          To Cash A/c   $256,500  

(Being the payment of cash dividend is recorded)

On July 31

Retained earning A/c Dr   $256,500  

           To Dividend A/c           $256,500  

(Being cash dividend declared)