Lotoya Davis Corporation has 10.29 million shares of common stock issued and out
ID: 2418150 • Letter: L
Question
Lotoya Davis Corporation has 10.29 million shares of common stock issued and outstanding. On June 1, the board of directors voted an 71 cents per share cash dividend to stockholders of record as of June 14, payable June 30.
(a) Prepare the journal entry 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
6/1
6/14
6/30
(b) How would the entry differ if the dividend were a liquidating dividend? (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.)
Account Titles and Explanation
Debit
Credit
Date
Account Titles and Explanation
Debit
Credit
6/1
6/14
6/30
Explanation / Answer
It is assumed that the face value per share is $1
a) Journal entries
6/1) Retained earnings account debit ($1*10.29*71%) 7.31 million
Dividend payable account credit 7.31 million
6/14) No entry
6/30) Dividends payable account debit 7.31 million
Cash account credit 7.31 million
b) Journal entries:
6/1) Additional paid in capital account debit ($1*10.29*71%) 7.31 million
Dividend payable account credit 7.31 million
6/14) No entry
6/30) Dividends payable account debit 7.31 million
Cash account credit 7.31 million
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