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 dividend declaration 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 dividend is declared on outstanding shares, which is 190,000 issued shares minus 10,000 treasury shares, totaling 180,000 shares. At $0.50 per share, the total dividend is $90,000. The correct entry is to debit Retained Earnings and credit Common Dividends Payable for $90,000.

West Company Declared a $0