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8 May, 08:01

Weaver Corporation had the following stock issued and outstanding at January 1, Year 1:

150,000 shares of $1 par common stock.

15,000 shares of $100 par, 6 percent, noncumulative preferred stock.

On June 10, Weaver Corporation declared the annual cash dividend on its 15,000 shares of preferred stock and a $0.50 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 (be sure to date your entries).

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Answers (1)
  1. 8 May, 08:09
    0
    Answer and Explanation:

    The computation and the journal entries are shown below:

    a. The total amount of dividend distributed to each shareholders are given below:

    For Preferred shareholder, it is

    = 15,000 * $100 * 6%

    = $90.000

    And for Common shareholder, it is

    = 150,000 * $0.5

    = $75000

    So total dividend is

    = $90,000 + $75,000

    = $165,000

    B) Now the journal entries are

    On June 10

    Dividend $165,000

    To dividend payable $165,000

    (Being dividends payable is recorded)

    On June 20

    No journal entry is required

    On July 1

    Dividend payable $165,000

    To To cash $165,000

    (being the dividend payment is recorded)

    On Dec 31

    Retained earning $165,000

    To dividends $165,000

    (Being dividend account is recorded)
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