West Company declared a $0.50 per share cash dividend. The company has 190,000 shares issued, and...

West Company declared a $0.50 per share cash dividend. The company has 190,000 shares issued, and 10,000 shares in treasury stock. The journal entry to record the payment of the dividend is:

Multiple Choice

Debit Common Dividends Payable $90,000; credit Cash $90,000.
Debit Retained Earnings $90,000; credit Common Dividends Payable $90,000.
Debit Retained Earnings $5,000; credit Common Dividends Payable $5,000.
Debit Retained Earnings $95,000; credit Common Dividends Payable $95,000.
Debit Common Dividends Payable $95,000; credit Cash $95,000.

Solutions

Expert Solution

Solution:

Total Common Dividend = Shares Outstanding * $0.50 = (190000 - 10000) * $0.50 = $90,000

Journal Entry
Particulars	Debit	Credit
Common Dividend payable Dr	$90,000
To Cash		$90,000

Hence first option is correct.

ekkarill92 answered 1 year ago

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