Mustang Company has the following shares of stock outstanding: Preferred, 8%, $100 par, 10,000 shares (Dividends totaling $15,000 are in arrears.) Common, $1 par, 100,000 shares On October 22, the board of directors declared cash dividends totaling $100,000, payable on December 24 to shareholders of record as of November 24. The preferred stock is NONCUMULATIVE. Which of the following will be included in the journal entry to record the declaration of the dividends?
Question 1 options: Debit Paid-in capital – dividends in arrears $15,000
Debit Retained earnings $115,000
Credit Dividends payable, preferred $95,000
Credit Dividends payable, common $20,000
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