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Q7SE_2

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Horngren'S Financial And Managerial Accounting
Found in: Page 709

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Short Answer

Question: Accounting for cash dividends

Java Company earned net income of $85,000 during the year ended December 31, 2018. On December 15, Java declared the annual cash dividend on its 4% preferred stock (par value, $120,000) and a $0.25 per share cash dividend on its common stock (50,000 shares). Java then paid the dividends on January 4, 2019.

Requirements

2. Journalize for Java the entry paying the cash dividends on January 4, 2019.

Answer

Dividend payable- Preferred and Dividend payable- common will be debited with $4,800 and $12,500 respectively: Cash Dividend will be credited with $17,300.

See the step by step solution

Step by Step Solution

Step 1: Basic Introduction

Step 2: Journals of paying dividend

Date

Transaction

Debit

Credit

2019 Jan 4

Dividend payable- Preferred

$4,800

Dividend payable- Common

$12,500

Cash

$17,300

To record payment of dividend

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