On August 15, 2021, EasyMoney, Inc.’s Board of Directors meets and declares that EasyMoney will pay a dividend to its stockholders. Each share of EasyMoney's Common Stock will be paid a dividend of $1.25 per share. There are currently 100,000 shares of EasyMoney's Common Stock held by EasyMoney’s shareholders. The following are the facts related to this dividend: Dividend per Share .................... $1.25 Date of Declaration .................... August 15, 2021 Date of Record ........................... September 5, 2021 Date of Payment ........................ September 20, 2021 The following is a partial list of the accounts in EasyMoney, Inc.’s General Ledger. These are the only accounts you need for this problem. Cash Dividends Payable Retained Earnings As of August 1, 2021, the Beginning Balance in the Dividends Payable account is $0 and the Beginning Balance in the Retained Earnings account is $625,000. Requirement 1 A. Record the entry that EasyMoney should make in the General Journal on August 15, 2021 to record the declaration of the dividend. B. After making and posting the August 15 entry, what are the Current Balances in the: Dividends Payable account? Retained Earnings account? Requirement 2 A. EasyMoney’s Accounting Cycle is one month long. EasyMoney’s Net Income for the month of August is $52,000. Prepare the Calculation of Retained Earnings as of August 31 for the Balance Sheet. B. What would be the amount of Dividends Payable on EasyMoney’s August 31 Balance Sheet? Requirement 3 A. Record the entry that EasyMoney should make in the General Journal on September 20, 2021 to record the payment of the dividend. B. After making and posting the September 20 entry, what is the Current Balance in the: Dividends Payable account
Reporting Cash Flows
Reporting of cash flows means a statement of cash flow which is a financial statement. A cash flow statement is prepared by gathering all the data regarding inflows and outflows of a company. The cash flow statement includes cash inflows and outflows from various activities such as operating, financing, and investment. Reporting this statement is important because it is the main financial statement of the company.
Balance Sheet
A balance sheet is an integral part of the set of financial statements of an organization that reports the assets, liabilities, equity (shareholding) capital, other short and long-term debts, along with other related items. A balance sheet is one of the most critical measures of the financial performance and position of the company, and as the name suggests, the statement must balance the assets against the liabilities and equity. The assets are what the company owns, and the liabilities represent what the company owes. Equity represents the amount invested in the business, either by the promoters of the company or by external shareholders. The total assets must match total liabilities plus equity.
Financial Statements
Financial statements are written records of an organization which provide a true and real picture of business activities. It shows the financial position and the operating performance of the company. It is prepared at the end of every financial cycle. It includes three main components that are balance sheet, income statement and cash flow statement.
Owner's Capital
Before we begin to understand what Owner’s capital is and what Equity financing is to an organization, it is important to understand some basic accounting terminologies. A double-entry bookkeeping system Normal account balances are those which are expected to have either a debit balance or a credit balance, depending on the nature of the account. An asset account will have a debit balance as normal balance because an asset is a debit account. Similarly, a liability account will have the normal balance as a credit balance because it is amount owed, representing a credit account. Equity is also said to have a credit balance as its normal balance. However, sometimes the normal balances may be reversed, often due to incorrect journal or posting entries or other accounting/ clerical errors.
10-1
On August 15, 2021, EasyMoney, Inc.’s Board of Directors meets and declares that EasyMoney
will pay a dividend to its stockholders. Each share of EasyMoney's Common Stock will be paid a
dividend of $1.25 per share. There are currently 100,000 shares of EasyMoney's Common Stock
held by EasyMoney’s shareholders.
The following are the facts related to this dividend:
Dividend per Share .................... $1.25
Date of Declaration .................... August 15, 2021
Date of Record ........................... September 5, 2021
Date of Payment ........................ September 20, 2021
The following is a partial list of the accounts in EasyMoney, Inc.’s General Ledger. These are the
only accounts you need for this problem.
Cash
Dividends Payable
As of August 1, 2021, the Beginning Balance in the Dividends Payable account is $0 and the
Beginning Balance in the Retained Earnings account is $625,000.
Requirement 1
A. Record the entry that EasyMoney should make in the General Journal on August 15, 2021
to record the declaration of the dividend.
B. After making and posting the August 15 entry, what are the Current Balances in the:
Dividends Payable account?
Retained Earnings account?
Requirement 2
A. EasyMoney’s Accounting Cycle is one month long. EasyMoney’s Net Income for the month
of August is $52,000. Prepare the Calculation of Retained Earnings as of August 31 for the
Balance Sheet.
B. What would be the amount of Dividends Payable on EasyMoney’s August 31 Balance
Sheet?
Requirement 3
A. Record the entry that EasyMoney should make in the General Journal on September 20,
2021 to record the payment of the dividend.
B. After making and posting the September 20 entry, what is the Current Balance in the:
Dividends Payable account
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