Question

CASH DIVIDENDS Show the effects of each transaction on the balance sheet equation, and prepare journal entries to receord the transactions. Jones Corp. has 200,000 shares of stock authorized, 120,000 shares issued, and 100,000 shares outstanding. Ref. Assets Equity Liabilities Dividends Payable (+L) (a) Dividends (-SE) On August 1, Jones' Board of Directors declared a cash dividend of $0.50 per share, with a record date of September 1. The dividend will be paid on October 1. Date Account Debit Credit 1-Aug Dividends Dividends Payable Assets Liabilities Equity (b) The date of Record NO ENTRY! Date Account Credit Sept. 1 Equity Liabilities Dividends Payable (L) HHHHH Assets Cash (-A) (c) The dividend is paid on October 1. 1 Date Account Credit Oct. 1 Dividends Payable Cash Assets = Liabilities (d) Prepare the yearend closing entry for dividends. Equity Dividends (+SE) Retained Earnings (-SE) Date Account Debit Credit Dec. 31 Retained Earnings Dividends

Answer 1

Journal Entries Date Account Title and Explaination Debit Credit Post. Ref. Aug.1 $ 50,000.00 Dividends (100,000 x $0.50) Dividends Payable (To record declaration of Cash Dividend) $ 50,000.00 Sep.1 No Journal Entry at Record Date Oct.1 Dividends Payable $ 50,000.00 Cash $ 50,000.00 (To record payment of Dividends) $ 50,000.00 Dec.31 Retained Earnings Dividends (To Close Dividends account to retained earnings) 50,000.00

Assets = Equity Liabilities + Dividends Payable $50,000 a N/A Dividends $50,000 At the time of declaration N/A N/A N/A No Entry Required Dividends Payable (-$50,000) Cash (-$50,000) N/A At the time of Payment of Dividends N/A N/A Dividends (-$50,000) At the time of Closing dividends Retained Earnings $50,000