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13 February, 07:40

The annual report for Sneer Corporation disclosed that the company declared and paid preferred dividends in the amount of $220,000 in the current year. It also declared and paid dividends on common stock in the amount of $1.80 per share. During the current year, Sneer had 1 million common shares authorized; 420,000 shares had been issued; and 208,000 shares were in treasury stock. The opening balance in Retained Earnings was $780,000 and Net Income for the current year was $280,000.

Required:

a. Prepare journal entries to record the declaration, and payment, of dividends on (a) preferred and (b) common stock.

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  1. 13 February, 09:10
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    1) Journal entry

    No. Account and explanation debit credit

    a Cash dividend 220000

    Preferred Dividend payable 220000

    (To record dividend declared)

    b Preferred dividend payable 220000

    Cash 220000

    (To record dividend paid)

    C Cash dividend (420000-208000) * 1.8 381600

    Common Dividend payable 381600

    (To record dividend declared)

    d Common Dividend payable 381600

    Cash 381600

    (To record dividend paid)
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