Following is the shareholders' equity section of the balance sheet of the Optimum Corporation: Share capital:
Common shares, 100,000 shares authorized,
The common shares are currently selling for $15.50 per share.
The entry to record the declaration of a $0.75 per share cash dividend includes:

Question

Following is the shareholders' equity section of the balance sheet of the Optimum Corporation: Share capital:
Common shares, 100,000 shares authorized,
 The common shares are currently selling for $15.50 per share.
The entry to record the declaration of a $0.75 per share cash dividend includes:

Quizplus · Accepted Answer

The declaration of a cash dividend involves paying out a portion of the retained earnings to the shareholders. Therefore, the entry would be a debit to Retained Earnings and a credit to Dividends Payable. The calculation for the overall amount of the dividend would be: $0.75 per share x 100,000 shares = $75,000. Therefore, the entry to record this dividend payment would be a debit to Retained Earnings for $75,000.

Following Is the Shareholders' Equity Section of the Balance Sheet