Question

The board of directors of Capstone Inc. declared a $0.40 per share cash dividend on its $3 par common stock. On the date of declaration, there were 47,000 shares authorized, 24,000 shares issued, and 5,000 shares held as treasury stock. What is the entry when the dividends are declared?

Answer 1

Answer:

Dividends debit = $7600

Dividends Payable credit $7600

Explanation:

given data

cash dividend = $0.40 per share

common stock = $3

shares authorized = 47,000

shares issued = 24,000

treasury stock = 5,000 shares

to find out

entry when the dividends are declared

solution

we get here first Dividends for debit that is express as

Dividends for debit = ( shares issued - treasury stock ) × cash dividend

Dividends for debit = ( 24000 - 5000 ) × 0.40

Dividends debit = $7600

and  

Dividends Payable credit $7600