The annual report for Sneer Corporation disclosed that the company declared and

Question

The annual report for Sneer Corporation disclosed that the company declared and paid preferred dividends in the amount of $110,000 in the current year. It also declared and paid dividends on common stock in the amount of $2.10 per share. During the current year, Sneer had 1 million common shares authorized; 310,000 shares had been issued; and 109,000 shares were in treasury stock. The opening balance in Retained Earnings was $810,000 and Net Income for the current year was $310,000. Required: 1. Prepare journal entries to record the declaration, and payment, of dividends on (a) preferred and (b) common stock. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.) view transaction list view general journal Journal Entry Worksheet 1234 Record the declaration of a cash dividend of $110,000 to the preferred stockholders. Transac tion General Journal DebitCredit *Enter debits before credits done clear entryrecord entry

Explanation / Answer

Answer 1 Journal Entry to record declaration of cash dividend to preferred shareholders Transaction General Journal Debit Credit a(1) Retained earnings 110000 Dividend payable 110000 (Being dividend payable to preferred stockholders) a(2) Retained earnings 228900 Dividend payable 228900 (Being dividend payable to common stockholders @ $2.10 per share) Answer 2 Statement of retained earnings for the year ended December 31 SNEER CORPORATION Statement of retained earnings for the year ended December 31 In $ Retained earning , January 1 810000 Less : Dividend declared to Preferred stockholders 110000 Less : Dividend declared to Common stockholders 228900 Add : Net Income for the current year 310000 Retained earning , December 31 781100 Answer 3 Journal Entry to close the dividend account Transaction General Journal Debit Credit 1 Dividend payable 338900 Cash 338900 (Dividend paid to preferred and common stock holders)

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