Question 1

Which of the following dividend dates gets a formal journal entry?

Accepted Answer

The date of payment is when the actual cash outflow occurs for the dividend, necessitating a formal journal entry to reflect the decrease in cash and the corresponding decrease in retained earnings or dividends payable.

Question 2

On June 7, Ramirez Incorporated paid a $6.25 cash dividend per share on 3,200 shares issued and outstanding. What is the journal entry to record this transaction?

Accepted Answer

The journal entry to record the payment of dividends involves decreasing (crediting) Cash and decreasing (debiting) Dividends Payable, both by the total dividend amount of $20,000 (3,200 shares x $6.25 per share).

Question 3

The journal entry to pay a cash dividend is to:

Accepted Answer

When a company pays a cash dividend, it decreases its cash balance and its liability for dividends payable. Therefore, the correct journal entry is to debit (decrease) Dividends Payable and credit (decrease) Cash.

Question 4

What are the annual dividends on preferred stock, $20 par, 560 authorized, 310 shares issued, and a dividend rate of 11%? (Round your answer to the nearest dollar.)

Accepted Answer

The answer of What are the annual dividends on preferred...

Question 5

On the date of record, the journal entry would include:

Accepted Answer

No journal entry is required on the date of record for dividends because this date simply identifies who will receive the dividend. The accounting entries for dividends are made on the declaration date and the payment date, not on the record date.

Question 6

ABC Corporation issued a two-for-one stock split. The number of outstanding shares before the split was 20,000 and the par value was $24 per share. After the split, what was the par value per share and number of shares? (Round your answer to the nearest cent.)

Accepted Answer

In a two-for-one stock split, the number of shares doubles, so the new number of shares is 40,000. The par value per share is halved, making it $12.00 per share.

Question 7

Before a four-for-one stock split, the shares outstanding were 7,000 shares at $12 par. After the split, what was the par value per share and number of shares? (Round your answer to the nearest cent.)

Accepted Answer

In a four-for-one stock split, each original share is divided into four shares, thus quadrupling the number of shares. The new par value per share is the original par value divided by four. Therefore, the new number of shares is 7,000 * 4 = 28,000, and the new par value per share is $12 / 4 = $3.00.

Question 8

The entry to record the payment of a cash dividend would include a:

Accepted Answer

The entry to record the payment of a cash dividend includes a debit to Dividends Payable (to reduce the liability) and a credit to Cash (to reflect the outflow of cash).

Question 9

Declaration of a cash dividend causes:

Accepted Answer

A cash dividend results in a decrease in stockholders' equity because it represents a distribution of the company's earnings to its shareholders, reducing the retained earnings component of stockholders' equity.

Question 10

The entry to record the distribution of the stock dividend would include:

Accepted Answer

A debit to Common Stock Dividend Distributable is made to record the distribution of a stock dividend.

Question 11

On March 8, Nunes Corporation declares a $3 cash dividend per share on 4,000 shares issued and outstanding. What is the journal entry to record this transaction?

Accepted Answer

When a corporation declares a cash dividend, it debits Retained Earnings to reflect the reduction in equity and credits Dividends Payable to establish the liability for the amount to be paid out.

Question 12

The date of record for cash dividends is:

Accepted Answer

The date of record for cash dividends is the date established by the board of directors that determines who will receive dividends. It is the date when the company looks at its records to determine the shareholders eligible to receive the dividend.

Question 13

Michigan Steamers has 3,800 shares of $22 par value common stock outstanding. During the current year, the company distributed a 4% stock dividend. The market value of the stock at that time was $17 per share. Bailey's total stockholders' equity should increase or decrease by:

Accepted Answer

A stock dividend redistributes shares to existing shareholders without changing the total stockholders' equity. The value of the equity remains the same; it's just represented by a greater number of shares after the dividend.

Question 14

Malcolm Corporation declared a dividend of $5 per share on 2,200 shares. The entry to record the transaction would be to:

Accepted Answer

The answer of Malcolm Corporation declared a dividend of $5...

Question 15

The journal entry to record the issuance of a stock dividend is to:

Accepted Answer

The issuance of a stock dividend results in an increase in the number of shares outstanding but does not affect the total equity of the company. Therefore, the journal entry to record the issuance of a stock dividend is to debit Common Stock Dividend Distributable and credit Common Stock.

Question 16

Payment of a cash dividend causes:

Accepted Answer

Payment of a cash dividend results in a decrease in the company's cash balance, which is an asset, thus reducing the company's liabilities to its shareholders in the form of dividends payable. It does not increase an asset or stockholders' equity; instead, it decreases assets (cash) and decreases liabilities (dividends payable).

Question 17

A distribution to stockholders in the form of stock is called a:

Accepted Answer

A stock dividend is a distribution to shareholders in the form of additional shares of stock rather than cash.

Question 18

Which of the following is the journal entry to record the declaration of a stock dividend?

Accepted Answer

When a company declares a stock dividend, it transfers the market value of the declared dividend from Retained Earnings to Common Stock Dividend Distributable and Paid-In Capital in Excess of Par Value Stock Dividend, reflecting the distribution's impact on the company's equity structure without involving cash or changing the total equity.

Question 19

The liability account showing the amount of cash dividend owed is:

Accepted Answer

Dividends Payable is the liability account that reflects the amount of cash dividends that a company has declared but not yet paid to its shareholders. It represents an obligation to pay the declared dividends.

Question 20

In the dividend process, the liability Dividend Payable is recognized on the:

Accepted Answer

The liability Dividend Payable is recognized on the date of declaration because it is on this date that the board of directors formally approves and announces the dividend, creating a legal obligation for the company to pay its shareholders.

Quiz 19: Corporations: Stock Values, Dividends, Treasury Stocks,