Question

A recent annual report for Nordstrom Inc., disclosed that the company declared and paid dividends on common stock in the amount of $1.20 per share. During the year, Nordstrom had 1,000,000,000 authorized shares of common stock and 191,200,000 issued shares. There is no treasury stock.

Required: Assume Nordstrom declared the entire dividend ($1.20 per share) on February 20 and subsequently paid the dividend on March 1. Prepare a journal entry to record the declaration and payment of dividends. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in whole dollars not in millions (i.e., 1,000,000 not 1.0).)

Answer 1

Ans:

Date	Account Name	Debit	Credi
Feb.20	Retained Earnings	$229,440,000
	To Dividend Payable		$229,440,00
	( to record declaration of dividend.)
Mar.1	Dividend Payable	$229,440,000
	To Cash		$229,440,000
	( to record payment of dividends)

Explanation:

= Oustanding stock * div per share

= 191,200,000 * $1.20

=$ 229,440,000

( Note: we can also use dividend account instead of retained earning account in the 1st entry.)