Question

Lavender Company has 3,500,000 outstandning ordinary shares with a par value of $1, on December 5,...

Lavender Company has 3,500,000 outstandning ordinary shares with a par value of $1, on December 5, 2017 the company has declared 30% cash dividends of the par payable on February 4, 2018.

Requiment:

1-Prepre the decleration and payment enrties for each of the date above, assuming the dividends represent distrubution of profit.

2-Ignoring above requirement, Prepre the decleration and payment entries for each of the date above, assuming the dividends above has partial return of capital which equal to $250,000.

Homework Answers

Answer #1
1-Declaration and payment enrties , assuming the dividends represent distrubution of profit
Dec 5,2017 Debit Credit
Retained Earnings 1050000
Dividends Payable 1050000
(3500000 shares*$ 1*30%)
Feb 4,2018
Dividends Payable 1050000
Cash 1050000
2-Declaration and payment enrties , assuming the dividends are partial return of capital
Dec 5,2017
Additional Paid-in-capital 250000
Retained Earnings 800000
Dividends Payable 1050000
(3500000 shares*$ 1*30%)
Feb 4,2018
Dividends Payable 1050000
Cash 1050000
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