Fetzer Company declared a $0.25 per share cash dividend. The company has 360,000

Question

Fetzer Company declared a $0.25 per share cash dividend. The company has 360,000 shares authorized, 342,000 shares issued, and 14,400 shares in treasury stock. The journal entry to record the payment of the dividend is:

Debit Retained Earnings $85,500; credit Common Dividends Payable $85,500.

Debit Common Dividends Payable $85,500; credit Cash $85,500.

Debit Retained Earnings $81,900; credit Common Dividends Payable $81,900.

Debit Retained Earnings $90,000; credit Common Dividends Payable $90,000.

Debit Common Dividends Payable $81,900; credit Cash $81,900.

Explanation / Answer

Debit Retained Earnings $81,900; credit Common Dividends Payable $81,900

No. of Share Outstanding= Shares Issued-Treseaury Stock

=342000-14400= 327600

Dividend Declared= 327600*$0.25= $81900

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