Question

Review Assignment 11 value: 10.00 points The annual report for Sneer Corporation disclosed that the company declared and paid preferred dividends in the amount of $160,000 in the current year. It also declared and paid dividends on common stock in the amount of $2.60 per share. During the current year, Sneer had 1 million common shares authorized; 360,000 shares had been issued; and 154,000 shares were in treasury stock. The opening balance in Retained Earnings was $860,000 and Net Income for the current year was $360,000. Required 1. Prepare journal entries to record the declaration, and payment, of dividends on (a) preferred and (b) common stock. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.) View transaction list Journal entry worksheet Record the payment of the cash dividend to the common stockholders Note: Enter debits before credits. Record entry View general journal Clear entry 2. Using the information given above, prepare a statement of earnings for the year ended December 31 Statement of Retained Earnings Retained Eamings, January 1 Retained Earnings. December 31

Answer 1

1) Journal entry :

No	accounts & explanation	debit	credit
a(1)	Cash dividend	160000
	Preferred dividend payable		160000
	(To record dividend declared)
a(2)	Preferred dividend payable	160000
	Cash		160000
	(To record dividend paid)
b(1)	Cash dividend (360000-154000)*2.6	535600
	Common Dividend payable		535600
	(To record dividend declared)
b(2)	Common Dividend payable	535600
	Cash		535600
	(To record dividend paid)

2)

Retained earnings, January 1	860000
Add: Net income	360000
Less: Dividend	-695600
Retained earnings, December 31	524400

3) Journal entry :

Date	accounts & explanation	debit	credit
	Retained earnings	695600
	Cash dividend		695600
	(To close dividend account)