Log out Go to App
Go to App

Learning Materials

Features

Discover

Chapter 15: Question 10BE (page 811)

Woolford Inc. declared a cash dividend of $1.00 per share on its 2 million outstanding shares. The dividend was declared on August 1, payable on September 9 to all stockholders of record on August 15. Prepare all journal entries necessary on those three dates.

Short Answer

Expert verified

The dividend paid by Woolford Inc. on September 9 was $2,000,000.

Step by step solution

01

Meaning of Dividend

Dividends are paid to shareholders. A dividend is an amount paid to a shareholder from the profits produced by the firm in which he holds stock. The sum is determined by the number and type of shares he holds.

02

Preparing journal Entries of Woolford Inc.

Date

Particular

Folio

Debit $

Credit $

August 1

Retained Earnings A/c(2,000,000$1)

2,000,000

Dividend Payable A/c

2,000,000

To record the payment of dividend

August 15

No entry

September 9

Dividend Payable A/c

2,000,000

Cash A/c

2,000,000

To record the payment of dividend

Unlock Step-by-Step Solutions & Ace Your Exams!

  • Full Textbook Solutions

    Get detailed explanations and key concepts

  • Unlimited Al creation

    Al flashcards, explanations, exams and more...

  • Ads-free access

    To over 500 millions flashcards

  • Money-back guarantee

    We refund you if you fail your exam.

Start your free trial

Over 30 million students worldwide already upgrade their learning with Vaia!

One App. One Place for Learning.

All the tools & learning materials you need for study success - in one app.

Get started for free

Most popular questions from this chapter

Mary Tokar is comparing a GAAP-based company to a company that uses IFRS. Both companies report equity investments. The IFRS company reports unrealized losses on these investments under the heading “Reserves” in its equity section. However, Mary can find no similar heading in the GAAP-based company financial statements. Can Mary conclude that the GAAP-based company has no unrealized gains or losses on its non-trading equity investments? Explain.

This comment appeared in the annual report of MacCloud Inc.: “The Company could pay cash or property dividends on the Class A common stock without paying cash or property dividends on the Class B common stock. But if the Company pays any cash or property dividends on the Class B common stock, it would be required to pay at least the same dividend on the Class A common stock.” How is a property dividend accounted for in the financial records?

Where can authoritative IFRS guidance related to stockholders’ equity be found?

(Trading on the Equity Analysis) Presented below is information from the annual report of Emporia Plastics, Inc.

Operating income

\( 532,150

Bond interest expense

135,000

397,150

Income taxes

183,432

Net income

\) 213,718

Bonds payable

$1,000,000

Common stock

875,000

Retained earnings

375,000

Instructions

  1. Compute the return on common stockholders’ equity and the rate of interest paid on bonds. (Assume balances for debt and equity accounts approximate averages for the year.)
  2. Is Emporia Plastics, Inc. trading on the equity successfully? Explain.

Indicate how each of the following accounts should be classified in the Equity section.

  1. Share Capital—Ordinary.
  2. (b) Retained Earnings.
  3. Share Premium—Ordinary.
  4. Treasury Shares.
  5. Share Premium—Treasury
  6. Share Capital—Preference
  7. Accumulated Other Comprehensive Income.
See all solutions

Recommended explanations on Business Studies Textbooks

Strategic Direction

Read Explanation

Corporate Finance

Read Explanation

Introduction to Business

Read Explanation

Strategic Analysis

Read Explanation

Human Resources

Read Explanation

Change Management

Read Explanation
View all explanations

What do you think about this solution?

We value your feedback to improve our textbook solutions.

Study anywhere. Anytime. Across all devices.

Sign-up for free