Question

Tamarisk, Inc. has 1,000,000 authorized shares of $24 par value common stock. As of June 30, 2020, there were 800,000 shares issued and outstanding. On June 30, 2020, the board of directors declared a $0.50 per share cash dividend to be paid on August 1, 2020. Prepare the necessary journal entries to be recorded on (a) the date of declaration, (b) the date of record, and (c) the date of payment.

Answer 1

Answer:

Explanation:

The journal entries are shown below:

a. Retained earning A/c Dr  $400,000

         To Dividend payable A/c  $400,000

(Being cash dividend declared)

b. No journal entry is required

c. Dividend payable A/c Dr  $400,000

         To Cash A/c

(Being the payment is made for cash)

The computation of the dividend is shown below:

= 800,000 shares × $0.50 per share

= $400,000