Stellar Corporation has 12.10 million shares of common stock issued and outstand

Question

Stellar Corporation has 12.10 million shares of common stock issued and outstanding. On June 1, the board of directors voted an 85 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.) Date Account Titles and Explanation Debit Credit

Explanation / Answer

Req 1: Journal entries Date Accounts title and explanations Debit $ Credit$ 1-Jun Dividend Account Dr. 10285000      Dividend payable (12100,000*0.85) 10285000 14-Jun No entry 30-Jun Dividend payable Account Dr. 10285000      Cash account 10285000 Req 2: Balance of Retained earnings: Total income since incorportion 309000 Less: Dividend paid Cash dividend 55000 Stock dividend 33000 88000 Less: Unamortized discount 32000 Balance of Retained earnings: 189000 Note: Gain on Treasury stock will be transferred to Additional paid in capital-Treasury account.

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