Question

Frey & Felder (F&F) brands touch the lives of people around the world in 180 countries and territories. The F&F community consists of nearly 189,500 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. F&F has been paying a dividend for over 120 years and 2014 marks the 58th consecutive year that the Company has increased its dividend.
Assume that F&F declared a dividend of $2.51 per share on October 1, 2014, to stockholders of record on October 15. F&F paid the dividend on October 20. Prepare journal entries as appropriate for each date.

Answer 1

Answer: Please refer to Explanation

Explanation:

2014

Oct 1

DR Retained Earnings $7,530,000,000

CR Dividends Payable $7,530,000,000

(To record announcement of dividends payable)

2014

Oct 15

No entry. Not relevant to financial statement.

2014

Oct 20

DR Dividends Payable $7,530,000,000

CR Cash $7,530,000,000

(To record payment of Dividends).

Workings

Dividends Payable.

There are 3 billion shares outstanding and dividends are paid on shares outstanding.

Dividend is $2.51 per $1 per share so,

= 3,000,000,000 * 2.51

= $7,530,000,000