Question

Teal Corporation has 11.20 million shares of common stock issued and outstanding. On June 1, the board of directors voted an 75 cents per share cash dividend to stockholders of record as of June 14, payable June 30.

Prepare the journal entries for each of the dates above assuming the dividend represents a distribution of earnings. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

How would the entries differ if the dividend were a liquidating dividend? (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Answer 1

Answer:

Journal Entries:

Date	Account Titles and Explanation	Debit ($)	Credit ($)
June 1	Retained Earnings A/c Dr (11200000*0.75)	84,00,000
	To Dividends Payable S/c		84,00,000
June 14	No Entry	0
	No Entry		0
June 30	Dividends Payable A/c Dr	84,00,000
	To Cash A/c		84,00,000

             
Dividends were a Liquidating Dividends:

Date	Account Titles and Explanation	Debit ($)	Credit ($)
June 1	Paid-in Capital in Excess of par-Common Stock A/c Dr	84,00,000
	To Dividends Payable S/c		84,00,000
June 14	No Entry	0
	No Entry		0
June 30	Dividends Payable A/c Dr	84,00,000
	To Cash A/c		84,00,000