Question

Wilmington, Inc. brands touch the lives of people around the world in 180 countries and territories. The P&G community consists of nearly 188,000 employees. In 2014, the company had 10 billion shares of common stock authorized, 4 billion shares issued, and 3 billion shares outstanding. Par value is $1 per share. P&G has been paying a dividend for over 120 years and 2014 marks the 58th consecutive year that the Company has increased its dividend.
Required:

Assume that P&G declared a dividend of $2.45 per share on October 1, 2014, to stockholders of record on October 15. P&G paid the dividend on October 20. Prepare journal entries as appropriate for each date. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in whole dollars not in millions (i.e., 1,000,000 not 1.0).)
1. Record the appropriate journal entry on October 1.
2. Record the appropriate journal entry on October 15th.
3. Record the appropriate journal entry on October 20th.
Record the appropriate journal entry on October 15.

Answer 1

Answer:

The Journal entries are as follows:

(i) On October 1, 2014

Retained Earnings A/c  Dr. $7,350,000,000

To Dividend Payable                                        $7,350,000,000

(To record declaration of dividend on outstanding shares)

Workings:

Dividend Payable = Outstanding shares × Dividend per share

                              = 3 billion × $2.45

                              = $7.35 billion

(ii) On October 15, 2014

No Entry

(iii) On October 20, 2014

Dividend Payable A/c  Dr. $7,350,000,000

To cash                                                             $7,350,000,000

(To record payment of dividend)