Question

Novak Corp. has 8,100 shares of common stock outstanding. It declares a $5 per share cash dividend on November 1 to stockholders of record on December 1. The dividend is paid on December 31. Prepare the entries on the appropriate dates to record the declaration and payment of the cash dividend. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Record journal entries in the order presented in the problem. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Answer 1

Answer:

The Journal entries are as follows:

(i) On November 1,

Dividend Declared A/c [8,100 × $5]   Dr. $40,500

To Dividend payable                                                $40,500

(To record the Dividend Declared on common stock)

(ii) On December 31,

Dividend payable A/c   Dr. $40,500

To cash                                                 $40,500

(To record the payment of dividend payable)