Asked by aasiyyah ceasor on Jun 04, 2024
Verified
Hutter Corporation declared a $0.50 per share cash dividend on its common shares.The company has 20,000 shares authorized,9,000 shares issued,and 8,000 shares of common stock outstanding.The journal entry to record the dividend declaration is:
A) Debit Retained Earnings $4,000; credit Common Dividends Payable $4,000.
B) Debit Common Dividends Payable $4,000; credit Cash $4,000.
C) Debit Retained Earnings $4,500; credit Common Dividends Payable $4,500.
D) Debit Common Dividends Payable $4,500; credit Cash $4,500.
E) Debit Retained Earnings $10,000; credit Common Dividends Payable $10,000.
Shares Outstanding
Shares outstanding refer to all shares currently owned by shareholders, including restricted shares owned by company insiders and share blocks held by institutional investors.
Common Stock
A form of corporate equity ownership, a type of security that represents ownership in a corporation and gives holders voting rights and a share in the company's profits via dividends.
- Gain insight into the procedure and effects of proclaiming cash dividends for stockholders.
Verified Answer
JB
jacob belcherJun 08, 2024
Final Answer :
A
Explanation :
The journal entry to record a dividend declaration involves debiting Retained Earnings (since dividends reduce retained earnings) and crediting Common Dividends Payable (since the company owes this amount to its shareholders). Option A correctly reflects this journal entry, with a debit to Retained Earnings for $4,000 and a credit to Common Dividends Payable for $4,000.
Learning Objectives
- Gain insight into the procedure and effects of proclaiming cash dividends for stockholders.