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26 July, 10:26

Mapleleaf Industries declared a $0.85 per share cash dividend. The company has 130,000 shares authorized, 51,000 shares issued, and 48,000 shares of common stock outstanding. What is the journal entry to record the dividend declaration

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  1. 26 July, 11:26
    0
    Mapleleaf Industries

    Journal Entry

    Debit Cash Dividend $40,800

    Credit Dividends Payable $40,800

    To record the declaration of $0.85 per share cash dividend.

    Explanation:

    This journal entry shows the two accounts involved and how they are recorded when a cash dividend is declared (declaration date).

    Calculation of cash dividends is based on 48,000 shares of common stock outstanding and not on the issued shares nor the authorized. Usually, dividends are only payable to shareholders of record, who appear on the register of the company as holders of the shares on the specified date (date of records).

    So, the divided equals $40,800 (48,000 x $0.85).
  2. 26 July, 13:13
    0
    Debit Dividends and credit Dividends Payable for $40,800 was recorded in the journal entry as dividend declaration

    Explanation:

    Dividends are distribution (share or proportion) of profits paid to shareholders of a company from a company earnings. Dividends are not represented in the companies income statement. Dividends are only paid to outstanding shares.

    Dividends = outstanding shares * cash dividend

    Dividends = $0.85 per share cash dividend * 48,000 shares of common stock outstanding. = $40800

    Therefore a Debit Dividends and credit Dividends Payable for $40,800 was recorded in the journal entry as dividend declaration
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