Question

In: Accounting

On May 1, Year 1, Love Corporation declared a $61,500 cash dividend to be paid on...

On May 1, Year 1, Love Corporation declared a $61,500 cash dividend to be paid on May 31 to shareholders of record on May 15.

Required
a. Record the events occurring on May 1, May 15, and May 31 in a horizontal statements model. In the Cash Flow column, indicate whether the item is an operating activity (OA), investing activity (IA), or financing activity (FA). Use NA to indicate that an element was not affected by the event.


b. Prepare journal entries for all events associated with the dividend.

Solutions

Expert Solution

LOVE Corporation

Horizontal Statement Model

Balance sheet

Income Statement

Statement of cash flows

Date

Assets

=

Liabilities

+

Common Stock

+

Retained Earnings

Revenue

-

Expense

=

Net Income

May 1

NA

61,500

NA

(61,500)

NA

NA

NA

NA

NA

May 15

NA

NA

NA

NA

NA

NA

NA

NA

NA

May 31

(61,500)

(61,500)

NA

NA

NA

NA

NA

(61,500)

Financing activity

b)

Date

Account title and explanation

Debit

Credit

May 1st

Retained earnings

$        61,500

     Dividend payable

$        61,500

(Entry to record declaration of dividend)

May 15th

No entry

May 31st

Dividend payable

$        61,500

       Cash

$        61,500

(Entry to record payment of dividend declared)

ekkarill92 answered 2 years ago
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