Question

Frenchroast Company earned net income of $95,000 during the year ended December 31, 2016.

On December 15, Frenchroast declared the annual cash dividend on its 2% preferred stock (par value, $128,000) and a $0.75 per share cash dividend on its common stock (65,000 shares).

Frenchroast then paid the dividends on January 4, 2017.

1. Journalize for Frenchroast the entry declaring the cash dividends on December 15, 2016.

2. Journalize for Frenchroast the entry paying the cash dividends on January 4, 2017.

Answer 1

Answer:

1.

December 15 2016

Dr Retained Earnings                                     51,310

Cr Dividend Payable - Preferred stock        2,560  

Cr Dividend Payable - Common stock         48,750

(to record dividend declaration by Frenchroast Company)

2.

January 4, 2017

Dr Dividend Payable - Preferred stock        2,560  

Dr Dividend Payable - Common stock         48,750

Cr Cash                                                           51,310

( to record cash dividend payment Frenchroast Company)

Explanation:

Working notes:

For entry in December 15,2016:

Preferred stock dividend = 2% * par value = 2% * 128,000 = $2,560.

Common stock dividend = dividend per share * number of shares outstanding = 0.75 * 65,000 = $48,750.

Answer 2

Journal Entries are referred to as entries that record the transactions and maintain bookkeeping of the daily operation of the companies. The entries are recorded in order to avoid any sort of chaos at the period of fulls settlement.  

The journal entries have been attached below.

Working notes:

Entry amount of December 15, 2016:

$\begin{aligned}\text{Preferred stock dividend} &= 2\% \times par value \\&= 2\% \times 128,000\\& =\ 2,560.\end{aligned}$

$\begin{aligned}\text{Common stock dividend} &= \text{dividend per share} \times \text{number of shares outstanding}\\ &= 0.75 \times 65,000\\& = \ 48,750.\end{aligned}$

To know more about the Journal entries, refer to the link below:

https://brainly.com/question/15874376