Question

Whitetea Company earned net income of $82,000 during the year December 31,2018. On December 15,Whitetea declared the annual cash dividend on its 2% preferred stock (Par value,$118,000) and a $1.00 per share cash dividend on its common stock (60,000 Shares).Whitetea then paid the dividends on January 4,2019

Answer 1

Date	Accounts & Explanation	Debit$	Credit$
2018 Dec 15	Cash Dividend A/C	62,360
	To Dividend Payable - Common Stock A/c		60,000
	To Dividend Payable - Preferred Stock A/C		2,360
	(Being entry passed to  record cash Dividend)
2019,Jan,4	Dividend Payable  - Common Stock A/C	60,000
	Dividend Payable - Preferred Stock A/C	2,360
	To Cash A/C		62,360
	(Being entry passed to record dividend paid)

 

Calculation of Dividend Payable - Common Stock

Particulars	Amount$
Common stock Share	60,000
Per Share cash Dividend on its Common stock	1

Calculation of Dividend Payable - Preferred Stock

Particulars	Amount$
Preferred Stock ( Par value)	1,18,000
Annual Cash Dividend on its 2% preferred	2%
	2,360

 

Answer to the above Question clearly shown in the explanation option