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Splish Corporation has 10.20 million shares of common stock issued and outstanding. On June 1, the...

Splish Corporation has 10.20 million shares of common stock issued and outstanding. On June 1, the board of directors voted an 78 cents per share cash dividend to stockholders of record as of June 14, payable June 30.

Prepare the journal entries for each of the dates above assuming the dividend represents a distribution of earnings.

How would the entries differ if the dividend were a liquidating dividend?

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Answer #1
Date Account Titles and Explanation Debit Credit
June 1 Retained Earnings 7956000 =10200000*0.78
    Dividends Payable 7956000
June 14 No Entry 0
      No Entry 0
June 30 Dividends Payable 7956000
      Cash 7956000
Date Account Titles and Explanation Debit Credit
June 1 Paid-in Capital in Excess of par-Common Stock 7956000
    Dividends Payable 7956000
June 14 No Entry 0
      No Entry 0
June 30 Dividends Payable 7956000
      Cash 7956000
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