Weaver Corporation had the following stock issued and outstanding at January 1,

Question

Weaver Corporation had the following stock issued and outstanding at January 1, 2016: 1. 94,000 shares of $6 par common stock. 2. 4,500 shares of $140 par, 4 percent, noncumulative preferred stock. On June 10, Weaver Corporation declared the annual cash dividend on its 4,500 shares of preferred stock and a $2 per share dividend for the common shareholders. The dividends will be paid on July 1 to the shareholders of record on June 20. Required a. Determine the total amount of dividends to be paid to the preferred shareholders and common shareholders. b. Prepare general journal entries to record the declaration and payment of the cash dividends.

Explanation / Answer

a. Determine the total amount of dividends to be paid to the preferred shareholders and common shareholders

Preferred stock dividend = 4500*140*4% = 25200

Common stock dividend = 94000*2 = 188000

b. Prepare general journal entries to record the declaration and payment of the cash dividends.

Date accounts & explanation debit credit June 20 Cash dividend 213200 Preferred dividend payable 25200 Common dividend payable 188000 (To record dividend declared) July 1 Preferred dividend payable 25200 Common dividend payable 188000 Cash 213200 (To record payment of dividend)

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