Paid the dividends in (b). Prepare journal entries to record each of these event

Question

Paid the dividends in (b).

Prepare journal entries to record each of these events. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)

1

Record the purchase of $350,800 common stock.

2

Record the cash dividends declared in the amount of $260,400.

3

Record the payment of the dividend.

4

Record the issue of 108,000 shares of $0.10 par value common shares for $2 per share.

5

Closed the Dividends account. Record the entry.

The annual report for Malibu Beachwear reported the following transactions affecting stockholders’ equity:

Explanation / Answer

* Declaration of dividend can also be recorded as:-

If this entry is followed, then there will no closing entry to close the dividend account.

Journal Date Account Titles Debit Credit a Treasury stock 350,800 Cash 350,800 (To record purchase of common stock held as treasury) b Dividend* 260,400 Dividend Payable 260,400 (To record declaration of dividend) c Dividend Payable 260,400 Cash 260,400 (To record dividend paid) d Cash (108,000×2) 216,000 Common stock (108,000×0.10) 10,800 Paid in Capital in Excess of Par Value 205,200 (To record issue of 108,000 shares of $0.10 par value for $2 per share) e Retained Earnings 260,400 Dividend 260,400 (To close the dividend account)

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