FV Company earned net income of $75,000 during the year ended December 31, 2012. On December...

FV Company earned net income of $75,000 during the year ended December 31, 2012. On December 15, FV declared the annual cash dividend on its 5% preferred stock (par value, $115,000) and a $0.50 per share cash dividend on its common stock (55,000 shares). FV then paid the dividends on January 4, 2013.

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Requirements

Journalize for FV:
Declaring the cash dividends on December 15, 2012.
Paying the cash dividends on January 4, 2013.

Expert Solution

Please find below the answer for the above question:

Journal Entry:

Declaring the Cash dividends on December 15,2012.

Dec 15, 2012 Retained Earnings A/c Dr $ 33,250

To Dividend Payable A/c $ 33,250

(Being Dividend declared by the company for its preferred stock holders having par value of $ 115,000 at 5% = 5750 and 0.5 per share for 55,000 shares 27,500 - Total comes to $ 33,250)

Paying the cash dividends on January 4, 2013

Jan 4, 2013 Dividend Payable A/c Dr $ 33,250

To Bank/Cash A/c $ 33,250

(Being Dividend declared on Dec 15,2012 has been paid on Jan 4,2013 through bank to various stock holders)

ekkarill92 answered 2 years ago

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