Question

On November​ 1, 2019,​ Juno, Inc. declared a dividend of​ $3.00 per share on common stock.​ Juno, Inc. has​ 10,000 shares of common stock outstanding and​ 20,000 shares of preferred stock. The date of record is November​ 15, and the payment date is November​ 30, 2019. Regarding the date of​ record, which of the following statements is​ true?

Answer 1

Answer:

When a dividend payment is recorded (November 15, 2019), no journal entry should be made.

Explanation:

When a dividend is declared,  liability must be recorded for the total amount of the dividends and retained earnings must decrease. The journal entry should be:

November 1, 2019 .- dividend declaration ($3 per common share)

• Dr Retained Earnings account 30,000
• Cr Dividends Payable account 30,000

When the dividends are distributed, the journal entry should be as follows:

November 30, 2019 .- dividend distribution

• Dr Dividends Payable account 30,000
• Cr Cash account 30,000