Question

Hutter Corporation declared a $0.50 per share cash dividend on its common shares. The company has 43,000 shares authorized, 22,800 shares issued, and 17,200 shares of common stock outstanding. The journal entry to record the dividend declaration is:

Multiple Choice:

• Debit Retained Earnings $21,500; credit Common Dividends Payable $21,500.

• Debit Retained Earnings $11,400; credit Common Dividends Payable $11,400.

• Debit Common Dividends Payable $11,400; credit Cash $11,400.

• Debit Common Dividends Payable $8,600; credit Cash $8,600.

• Debit Retained Earnings $8,600; credit Common Dividends Payable $8,600.

Answer 1

Debit Retained Earnings $8600

Credit Common Dividend Payable $ 8600

Dividends are declared on a particular date.The record date merely determines the names of the stockholders that will receive the dividends. Dividends are only paid on outstanding shares of stock;

Record date is the date that determines which stock holder are entitled to receive a corporations declared dividend.The weighted average of outstanding shares is used to compute earning per share.