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Entries for cash dividends The declaration, record, and payment dates in connection with a cash dividend of $480,000 on a corporation’s common stock are February 1, March 18, and May 1. Journalize the entries required on each date.
Financial Accounting
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Financial Accounting
Entries for cash dividends
The declaration, record, and payment dates in connection with a cash dividend of $480,000 on a corporation’s common stock are February 1, March 18, and May 1. Journalize the entries required on each date.
Journalize the entries related to declaration, record, and payment of cash dividends.
Explanation of Solution
Cash dividends: The amount of cash provided by a corporation out of its distributable profits to its shareholders as a return for the amount invested by them is referred as cash dividends.
Declaration date: The date on which the board of directors of a corporation announces officially to distribute the dividends to its shareholders is referred as declaration date.
February 1–Declaration Date:
Record the journal entry for the declaration of cash dividends.
| Date | Account Titles and Explanation | Post Ref. | Debit ($) | Credit ($) | |
| February | 28 | Cash Dividends | 480,000 | ||
| Cash Dividends Payable | 480,000 | ||||
| (To record declaration of dividends) | |||||
Table (1)
- Cash Dividends is a temporary stockholders’ equity account. The account is debited as the cash dividends are declared and eventually be transferred to Retained Earnings account. Therefore, debit Cash Dividends account with $480,000.
- Cash Dividends Payable is a liability account and the amount owed is increased...
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