Weaver Corporation had the following stock issued and outstanding at January 1, Year 1: 131,000 shares of $15 par common stock. 5,000 shares of $80 par, 6 percent, noncumulative preferred stock. On June 10, Weaver Corporation declared the annual cash dividend on its 5,000 shares of preferred stock and a $4 per share dividend for the common shareholders. The dividends will be paid on July 1 to the shareholders of record on June 20. Required a. Determine the total amount of dividends to be paid to the preferred shareholders and common shareholders. b. Prepare general journal entries to record the declaration and payment of the cash dividends

a. amount of dividends to be paid to the preferred shareholders and common shareholders.

preferred shareholders = $24,000

common shareholders = $524,000

b (1). general journal entries to record the declaration

June 10

Dividends - preferred shareholders SCE $24,000 (debit)

Dividends - common shareholders SCE $524,000 (debit)

Shareholders for Dividends SFP $548,000 (credit)

b (2). general journal entries to record the cash dividends

July 1

Shareholders for Dividends SFP $548,000 (credit)

Cash $548,000 (debit)

Explanation:

a. amount of dividends to be paid to the preferred shareholders and common shareholders.

preferred shareholders = 5,000 shares * $80 * 6% = $24,000

common shareholders = 131,000 shares * $4 = $524,000

b (1). general journal entries to record the declaration

June 10

Dividends - preferred shareholders SCE $24,000 (debit)

Dividends - common shareholders SCE $524,000 (debit)

Shareholders for Dividends SFP $548,000 (credit)

Recognise Equity item - Dividends to the respective Equity Accounts and Recognise Liability - Shareholders for Dividends

b (2). general journal entries to record the cash dividends

July 1

Shareholders for Dividends SFP $548,000 (credit)

Cash $548,000 (debit)

De-recognise Liability - Shareholders for Dividends and De-recognise Cash Asset