West Company declared a $0.50 per share cash dividend.The company has 190,000 shares issued,and 10,000 shares in treasury stock.The journal entry to record the payment of the dividend is:
A)Debit Retained Earnings $90,000;credit Common Dividends Payable $90,000.
B)Debit Common Dividends Payable $95,000;credit Cash $95,000.
C)Debit Retained Earnings $5,000;credit Common Dividends Payable $5,000.
D)Debit Common Dividends Payable $90,000;credit Cash $90,000.
E)Debit Retained Earnings $95,000;credit Common Dividends Payable $95,000.

Question

Quizplus · Accepted Answer

The journal entry to record the payment of the dividend is to debit Common Dividends Payable (number of shares issued minus treasury stock times dividend per share) and credit Cash. The total amount of dividends payable is 190,000 - 10,000 = 180,000 shares * $0.50 per share = $90,000. Therefore, the correct journal entry is to debit Common Dividends Payable for $90,000 and credit Cash for $90,000.

West Company Declared a $0