Question

The board of directors of Capstone Inc. declared a $0.80 per share cash dividend on its $2 par common stock. On the date of declaration, there were 53,000 shares authorized, 21,000 shares issued, and 4,000 shares held as treasury stock.What is the entry when the dividends are declared?Dividends: 8,800Cash: 8,800Dividends: 36,000Dividends Payable: 36,000Dividends: 8,800Dividends Payable: 8,800Dividends: 12,800Cash: 12,800

Answer 1

Answer:

Dividends: 13,600 Dividends Payable: 13,600

Explanation:

Dividends: 8,800Cash: 8,800

Dividends: 36,000Dividends Payable: 36,000

Dividends: 8,800Dividends Payable: 8,800

Dividends: 12,800Cash: 12,800

Share issued =21000

Shares in treasury stock = 4000

Outstanding shares = 21000-4000 = 17000

Dividend per share = $0.80

Total Dividend = 17000 x $0.8

Total Dividend = $13,600

Transaction will be as follows

                                     Dr.           Cr.

Dividend                  $13,600

Dividend Payable                    $13,600

Data is Inconsistent with the options. According to given information the Journal Entry will be as above.