Fetzer Company declared a $010 per share cash dividend. The company has 100,000

Question

Fetzer Company declared a $010 per share cash dividend. The company has 100,000 shares authorized, 95,000 shares issued, and 4,000 shares In treasury stock. The journal entry to record the dividend declaration is: Multiple Choice Debit: Retained Earmings $10,000, credit Common Dividends Payable St0,000 Debit Common Dividends Payable $9,200, credit Cash $9,300 Debit Retained Earmings $9300, credit Common Dividends Payable $9300 Debit Retained Earnings $8,500, credt Common Dividends Peyable $9.500

Explanation / Answer

Correct Answer

Debit Retained Earnings $ 9500 and Credit Dividends Payable

Reason

Dividends are payable only on stock issued and there is no sense is crediting dividend liability for stock held in Treasury because treasury stock are owned by company itself.

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