On November 1, 2019, Juno, Inc. declared a dividend of $3.00 per share on common stock. Juno, Inc. has 10,000 shares of common stock outstanding and 20,000 shares of preferred stock. The date of record is November 15, and the payment date is November 30, 2019. Regarding the date of record, which of the following statements is true?

Question

Business

Aden Lewis

14 October, 08:26

On November 1, 2019, Juno, Inc. declared a dividend of $3.00 per share on common stock. Juno, Inc. has 10,000 shares of common stock outstanding and 20,000 shares of preferred stock. The date of record is November 15, and the payment date is November 30, 2019. Regarding the date of record, which of the following statements is true?

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Khloe Mcclain · Answer 1

When a dividend payment is recorded (November 15, 2019), no journal entry should be made.

Explanation:

When a dividend is declared, liability must be recorded for the total amount of the dividends and retained earnings must decrease. The journal entry should be:

November 1, 2019. - dividend declaration ($3 per common share)

Dr Retained Earnings account 30,000 Cr Dividends Payable account 30,000

When the dividends are distributed, the journal entry should be as follows:

November 30, 2019. - dividend distribution

Dr Dividends Payable account 30,000 Cr Cash account 30,000