On February 16,a company declares a 34¢ dividend to be paid on April 5.There are 2 million shares of common stock issued and 100,000 shares of treasury stock.What does the company record on April 5?

Question

Quizplus · Accepted Answer

On the date of declaration (February 16), the entry would have been a debit to Retained Earnings for $680,000 and a credit to Dividends Payable for $680,000.

On April 5, the entry would be a debit to Dividends Payable (to show the liability has been fulfilled) for $646,000 ($0.34 per share × 1,900,000 shares outstanding) and a credit to Cash for the same amount.

Therefore, the correct option is A debit to Dividends Payable and a credit to Cash for $646,000.

On February 16,a Company Declares a 34¢ Dividend to Be