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

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.

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

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BRUNO CORPORATION POST-CLOSING TRIAL BALANCE DECEMBER 31, 2017
	Dr.	Cr.
Accounts payable		\( 310,000
Accounts receivable	\) 480,000
Accumulated depreciation—buildings		185,000
Additional paid-in capital in excess
of par—common		1,300,000
From treasury stock		160,000
Allowance for doubtful accounts		30,000
Bonds payable		300,000
Buildings	1,450,000
Cash	190,000
Common stock (\(1 par)		200,000
Dividends payable (preferred stock—cash)		4,000
Inventory	560,000
Land	400,000
Preferred stock (\)50 par)		500,000
Prepaid expenses	40,000
Retained earnings		301,000
Treasury stock (common at cost)	170,000
Totals	\(3,290,000	\)3,290,000

At December 31, 2017, Bruno had the following number of common and preferred shares.
	Common	Preferred
Authorized	600,000	60,000
Issued	200,000	10,000
Outstanding	190,000	10,000

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

Step by step solution

Meaning of Dividend

Preparing journal Entries of Woolford Inc.

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