Question

On January 1, Flounder Corp. had 61,500 shares of no-par common stock issued and outstanding. The...

On January 1, Flounder Corp. had 61,500 shares of no-par common stock issued and outstanding. The stock has a stated value of $4 per share. During the year, the following transactions occurred.

Apr. 1 Issued 11,700 additional shares of common stock for $12 per share.
June 15 Declared a cash dividend of $1.90 per share to stockholders of record on June 30.
July 10 Paid the $1.90 cash dividend.
Dec. 1 Issued 5,200 additional shares of common stock for $13 per share.
Dec. 15

Declared a cash dividend on outstanding shares of $2.30 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?

Homework Answers

Answer #1

Journal entry

Date account and explanation debit credit
Apr 1 Cash (11700*12) 140400
Common Stock 46800
Paid in capital in excess of stated value-Common Stock 93600
June 15 Cash dividend (73200*1.9) 139080
Dividend payable 139080
July 10 Dividend payable 139080
Cash 139080
Dec 1 Cash (5200*13) 67600
Common stock 20800
Paid in capital in excess of stated value-Common Stock 46800
Dec 15 Cash dividend (78400*2.3) 180320
Dividend payable 180320
Dec 31 No entry

b) At the end dividend will be closed in retained earnings and retained earning decrease by total dividend amount but dividend payable is recorded at current liabilities in balance sheet

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