Homework Answers
| 1) Journal Entry | |||
| Date | Accounts | Debit | Credit |
| May. 1 | Preferred Dividends (65,000 shares * $2 per share) | $130,000 | |
| Common Dividends (113,000 shares * $0.28 per share) | $31,640 | ||
| Dividends Payable | $161,640 | ||
| (To record the declaration of dividends on both preferred and common stocks) | |||
| May. 14 | No entry as there is no transaction | ||
| May. 28 | Dividends Payable | $161,640 | |
| Cash | $161,640 | ||
| (To record the payment of dividends declared on preferred and common stocks) | |||
| May. 31 | Income Summary | $228,000 | |
| Retained Earnings | $228,000 | ||
| (To record the close of income summary account) | |||
| May. 31 | Retained Earnings | $161,640 | |
| Dividends ($130,000 + $31,640) | $161,640 | ||
| (To close the dividends) | |||
| 2) | |||
| Balance of Retained Earnings on June 1, 2019 | $52,900 | ||
| Add: Net Income | $228,000 | ||
| Less: Dividends | ($161,640) | ||
| Balance of Retained Earnings on May 31, 2020 | $119,260 | ||
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