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 $170,000 in the current year. It also declared and paid dividends on common stock in the amount of $2.70 per share. During the current year, Sneer had 1 million common shares authorized; 370,000 shares had been issued; and 163,000 shares were in treasury stock. The opening balance in Retained Earnings was $870,000 and Net Income for the current year was $370,000.

a) Prepare a journal entry to close the dividends account. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)

Explanation / Answer

Journal entry to close dividend account :

Date accounts & explanation debit credit Retained earnings 728900     Preferred Dividend 170000      Common Dividend (370000-163000)*2.7 558900 (To record close dividend account)

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