Question

Weaver Corporation had the following stock issued and outstanding at January 1, Year 1: 1.54,000 shares of $6 par common stock. 2.5,000 shares of $140 par, 6 percent, noncumulative preferred stock. On June 10, Weaver Corporation declared the annual cash dividend on its 5,000 shares of preferred stock and a $5 per share dividend for the common shareholders. The dividends will be paid on July 1 to the shareholders of record on June 20. Required a. Determine the total amount of dividends to be paid to the preferred shareholders and common shareholders. Total dividend b. Prepare general journal entries to record the declaration and payment of the cash dividends. (If no entry is required for a transaction/event, select "No journal entry required in the first account field.)

Answer 1

a.Total amount of dividends to be paid to:
Preferred shareholders	5000 *140*6%=	42000
Common shareholders	54000*5=	270000
Total dividend		312000

	b.   Journal entries
Date	Account Title	Debit	Credit
10-Jun	Retained earnings	312000
	Preferred dividends payable		42000
	Common stock dividends payable		270000
	(To record declaration of dividends to pref. & common stock shareholders , as on record, on June 20
20-Jun	NO ENTRY
	(No JE needed on record date)
1-Jul	Preferred dividends payable	42000
	Common stock dividends payable	270000
	Cash		3120000
	(To record cash paid towards the dividends declared on Jun 10)