Question

Greenland Corporation earned net income of $95,000 during the year ended December 31, 2018. On December 15, Greenland declared the annual cash dividend on its 2% preferred stock (10,000 shares with total par value of $100,000) and a $0.50 per share cash dividend on its common stock (35,000 shares with total par value of $350,000). Greenland then paid the dividends on January 4, 2019. Read the requirements. a. Journalize for Greenland Corporation the declaration for the cash dividends on December 15, 2018. (Record debits first, then credits. Exclude explanations from any journal entries. Use only a single account to record the dividends.) Journal Entry Accounts Date Debit Credit i Requirements 2018 Dec 15 Retained Earnings Dividends Payable Journalize the following for Greenland: a. Declaring the cash dividends on December 15, 2018 b. Paying the cash dividends on January 4, 2019 Did retained earnings increase or decrease during 2018? By how much? Print Done Choose from any list or enter any number in the input fields and then click Check Answer.

Answer 1

Dividend payable = ($100,000 X 2%) + ($0.50 X 35,000) = $19,500

Date	Accounts	Debit	Credit
Dec 15, 2018	Retained earnings	$19,500	-
	Dividend payable	-	$19,500
	(To record dividend declared)
Jan 4, 2019	Dividend payable	$19,500	-
	Cash	-	$19,500
	(To record dividend payment)

Dividends will reduce retained earnings. Retained earnings is reduced by $19,500.