Question

On January 1, Guillen Corporation had 95,000 shares of no-par common stock issued and outstanding. The stock has a stated value of $5 per share. During the year, the following occurred.

Apr.	1		Issued 25,000 additional shares of common stock for $17 per share.
June	15		Declared a cash dividend of $1 per share to stockholders of record on June 30.
July	10		Paid the $1 cash dividend.
Dec.	1		Issued 2,000 additional shares of common stock for $19 per share.
	15		Declared a cash dividend on outstanding shares of $1.2 per share to stockholders of record on December 31.

(b)

How are dividends and dividends payable reported in the financial statements prepared at December 31?

Answer 1

Shares outstanding at June 30	120000	=95000+25000
X Dividend per share	1
Dividends paid on July 10	120000
Shares outstanding at December 31	122000	=95000+25000+2000
X Dividend per share	1.2
Dividends payable at December 31	146400
Total dividends declared	266400	=120000+146400

b

In the Retained Earnings Statement, dividends of $266400 will be deducted

In the Balance Sheet, Dividends payable of $146400 will be reported as a Current liability