Question

Riverbed Corp has 8,400 shares of common stock outstanding. It declares a $5 per share cash dividend on November 1 to stockholders of record on December 1. The dividend is paid on December 31.
Prepare the entries on the appropriate dates to record the declaration and payment of the cash dividend.

Answer 1

Answer:

Date       Account Titles and Explanation        Debit           Credit

1-Nov     Cash Dividends                             $42,000

              (8,400 shares x $5)

             Dividends Payable                                                   $42,000

             (To record dividends payable)  

1-Dec      No entry on this date

31-Dec     Dividends Payable                     $42,000  

                Cash                                                                        $42,000

            (To record payment of cash dividend)