Cash dividends - and “Dividends Preferred Stock” rather...

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Cash dividends On May 1, the Board of Directors of Triple Play authorized payment of a $50,000 cash dividend on  June 30 to the stockholders of record on May 25. On May 1, the  date of declaration , the value of  the dividend to be paid is deducted from (debited to) retained earnings and set up as a liability in a  separate dividends payable account.  General Journal Date Account Title and Description Ref. Debit Credit 20X1 May 1 Retained Earnings 50,000 Dividend Payable 50,000 Authorized dividend It should be noted that some companies use separate accounts called “Dividends, Common Stock” 
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Unformatted text preview: and “Dividends, Preferred Stock” rather than retained earnings to record dividends declared. If these accounts are used, a closing entry is made at the end of the period to decrease (debit) retained earnings and decrease (credit) “Dividends, Common Stock” and “Dividends, Preferred Stock” to zero out the balances in the dividend accounts and update the retained earnings balance....
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This note was uploaded on 11/15/2011 for the course ACCT 2310 taught by Professor Staff during the Spring '09 term at Texas State.

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