Question

On September 15, 2020, the Board of Directors of Tamarisk Company declared a 90¢ per share cash dividend, payable on October 31 to shareholders of record as of October 1. On the date of declaration, Tamarisk Company had 205,000 common shares outstanding, of which 27,000 were held in Treasury. On October 15, 2020, the company issued an additional 60,000 common shares for $6.00 each.

Prepare all the required journal entries to record these transactions. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Record journal entries in the order presented in the problem.)
On September 15, 2020, the Board of Directors of Tamarisk Company declared a 90¢ per share cash dividend, payable on October 31 to shareholders of record as of October 1. On the date of declaration, Tamarisk Company had 205,000 common shares outstanding, of which 27,000 were held in Treasury. On October 15, 2020, the company issued an additional 60,000 common shares for $6.00 each. Prepare all the required journal entries to record these transactions. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter for the amounts. Record journal entries in the order presented in the problem.) Date Account Titles and Explanation Debit Credit Sept. 15 Dividends 214200 Dividends Payable 214200 Oct. 1 No Entry 0 No Entry 0 Oct. 15 Cash 360000 Common Shares 0000 Oct. 31 Dividends Payable 214200 Cash 214200

Answer 1

Dividend will be paid only on those shares which were outstanding at the time of declaration of dividend therefore in the above question dividend will not be paid on additional shares issued on 15 October, 2020 i.e. 60,000 Shares.

Credit Date Account Titles and Explanations Sep-15 Dividend Dividend Payable Debit $160,200 $160,200 Oct-01 No Entry No Entry $360,000 Oct-15 Cash Common Shares $360,000 Oct-31 Dividend Payable Cash $160,200 $160,200

Amount of Dividend = (205000-27000)*$0.90

Amount of Dividend = $160,200

I hope this clear your doubt.

Feel free to comment if you still have any query or need something else. I'll help asap.

Do give a thumbs up if you find this helpful.