mon shareholders b. Prepare general journal entries to record the declaration an

Question

mon shareholders b. Prepare general journal entries to record the declaration and payment of the cash di videiu (be sure to date your entries). Exercise 11-13A Cash dividends: common and preferred stock Nowell Inc. had the following stock issued and outstanding at January 1, 2016: 1. 150,000 shares of no-par common stock. 2. 30.000 shares of S50 par, 4 percent, cumulative preferred stock. (Dividends are in arrears for one year, 2015.) On March 8, 2016, Nowell declared a $175,000 cash dividend to be paid March 31 to share- holders of record on March 20. Required a. What amount of dividends will be paid to the preferred shareholders versus the common b. Prepare the journal entries required for these transactions (Be sure to include the dates of shareholders? the entries.) Exercise 11-14A Accounting for stock dividends

Explanation / Answer

a) Dividend distribution :

Preferred dividend = (30000*50*4%)*2 = 120000

Common stock dividend = (175000-120000) = 55000

b) Journal entry :

Date accounts & explanation debit credit 2016 mar 8 Dividend a/c 175000    Preferred dividend payable a/c 120000    Common stock dividend payable a/c 55000 (TO record dividend declared) 2016 mar 20        No entry 2016 mar 31 Preferred dividend payable a/c 120000 Common dividend payable a/c 55000       Cash a/c 175000 (To recorrd dividend paid)

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