Greentea Company earned a net income of $ 95,000 during the year ended December 31, 2018. On December 15, Greentea declared the annual cash dividend on its 6 % preferred stock (par value, $128,000 ) and a $1.00 per share cash dividend on its common stock (52,000 shares). Greentea then paid the dividends on January 4, 2019.

Requirements:

1. Journalize for Java the entry declaring the cash dividends on December 15, 2018.

2. Journalize for Java the entry paying the cash dividends on January 4, 2019.

Question

Business

Kemp

26 August, 13:29

Greentea Company earned a net income of $ 95,000 during the year ended December 31, 2018. On December 15, Greentea declared the annual cash dividend on its 6 % preferred stock (par value, $128,000 ) and a $1.00 per share cash dividend on its common stock (52,000 shares). Greentea then paid the dividends on January 4, 2019.

Requirements:

1. Journalize for Java the entry declaring the cash dividends on December 15, 2018.

2. Journalize for Java the entry paying the cash dividends on January 4, 2019.

+3

Answers (1)

Know the Answer?

Leonard Santiago · Answer 1

The journal entries are shown below:

1. Retained earnings A/c Dr $59,680

To Dividend payable A/c $59,680

(Being the declaration of the cash dividend is recorded)

The computation is shown below:

= Preferred stock * cash dividend percentage + common stock shares * cash dividend per share

= $128,000 * 6% + 52,000 shares + $1

= $7,680 + $52,000

= $59,680

2. Dividend payable A/c Dr $59,680

To Cash A/c $59,680

(Being the dividend is paid for cash)