Exercise 15-12 Martinez Corporation has 10.70 million shares of common stock iss

Question

Exercise 15-12 Martinez Corporation has 10.70 million shares of common stock issued and outstanding. On June 1, the board of directors voted an 86 cents per share cash dividend to stockholders of record as of June 14, payable June 30 Prepare the journal entries for each of the dates above assuming the dividend represents a distribution of earnings. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Date Account Titles and Explanation Debit Credit How would the entries differ if the dividend were a liquidating dividend? (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Date Account Titles and Explanation Debit Credit

Explanation / Answer

JOURNAL ENTRIES ASSUMING DIVIDENDS REPRESENT A DISTRIBUTION OF EARNINGS:

JOURNAL ENTRIES IF THE DIVIDEND WERE A LIQUIDATING DIVIDEND:

DATE ACCOUNT TITLES & EXPLANATIONS DEBIT CREDIT June 1 Retained Earnings 9.20 Dividends payable (10.70 * 0.86) 9.20 June 14 No entry June 30 Dividends Payable 9.20 Cash 9.20 *-----------------*-------------------*---------------------------*

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