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On January 1, 2021, the general ledger of Grand Finale Fireworks includes the following account balances:

Accounts Debit Credit Cash $ 44,300

Accounts Receivable 47,700

Supplies 9,100

Equipment 80,000

Accumulated Depreciation $ 10,600

Accounts Payable 16,200

Common Stock, $1 par value 16,000

Additional Paid-in Capital 96,000

Retained Earnings 42,300

Totals $ 181,100

During January 2021, the following transactions occur: January 2 Issue an additional 2,000 shares of $1 par value common stock for $40,000. January 9 Provide services to customers on account, $18,800. January 10 Purchase additional supplies on account, $6,500. January 12 Purchase 1,100 shares of treasury stock for $19 per share. January 15 Pay cash on accounts payable, $18,100. January 21 Provide services to customers for cash, $50,700. January 22 Receive cash on accounts receivable, $18,200. January 29 Declare a cash dividend of $0.20 per share to all shares outstanding on January 29. The dividend is payable on February 15. (Hint: Grand Finale Fireworks had 16,000 shares outstanding on January 1, 2021, and dividends are not paid on treasury stock.) January 30 Resell 700 shares of treasury stock for $21 per share. January 31 Pay cash for salaries during January, $43,600. The following information is available on January 31, 2021. Unpaid utilities for the month of January are $7,800. Supplies at the end of January total $6,700. Depreciation on the equipment for the month of January is calculated using the straightline method. At the time the equipment was purchased, the company estimated a service life of three years and a residual value of $11,600. (Hint: Start with the cost of the Equipment shown at the top.) Accrued income taxes at the end of January are $2,700.

Question: Record the declaration of a cash dividend of $0.20 per share to all shares outstanding on January 29. The dividend is payable on February 15. (Hint: Grand Finale Fireworks had 16,000 shares outstanding on January 1, 2018 and dividends are not paid on treasury stock.)

Respuesta :

Answer and Explanation:

The Journal entry is shown below:-

1. Cash Dr, $40,000  

    To Common stock $2,000

    To Additional paid in capital $38,000

(Being issue of common stock is recorded)

2. Accounts receivables Dr, $18,800  

      To Service revenue $18,800

(Being service revenue is recorded)

3. Supplies Dr, $6,500  

       To Accounts payable $6,500

(Being supplies is recorded)

4. Treasury stock Dr, $20,900

[1,100 × $19]  

       To Cash $20,900

(Being treasury stock is recorded)

5, Accounts payable Dr, $18,100  

        To Cash $18,100

(Being cash paid is recorded)

6. Cash Dr, $50,700  

       To Service revenue $50,700

(Being cash received is recorded)

7. Cash Dr, $18,200  

      To Accounts receivables $18,200

(Being cash received is recorded)

8. Dividends Dr, $3,380

(16,000 + 2000 - 1,100) × $0.20

     To dividends payable $3,380

(Being dividends declared is recorded)

9. Cash Dr, $14,700

[700 × $21]

     To Treasury stock $13,300

[700 × $19]

       To Additional paid in capital $1,400

(Being cash is recorded)

10. Salaries expense Dr, $43,600  

        To cash $43,600

(Being salary expenses is recorded)

11. Utilities expense Dr, $7800  

      To utilities payable $7800

(Being  utilities expense is recorded)

12. Supplies expense Dr, $8,900

[$9,100 + $6,500 - $6,700]

       To supplies $8,900

(Being supplies expenses is recorded)

13. Depreciation expense Dr, $1,900

[$80,000 - $11,600] ÷ 3 × 1 ÷ 12  

       To Accumulated depreciation $1,900

(Being depreciation expense is recorded)

14. Income tax expense $2,700  

       To Income tax payable $2,700

(Being income tax expenses is recorded)

anthougo

The Grand Finale Fireworks will record this journal entry for the dividend declaration as follows:

January 29, 2021:

Debit Dividend $3,380

Credit Dividend Payable $3,380

To record the declaration of $0.20 per share dividend payable on Feb. 15.

Cash Payment of Dividend:

February 15:

Debit Dividend Payable $3,380

Credit Cash $3,380

Data and Calculations:

January 1:     16,000 Common stock outstanding $16,000

January 2:     2,000 Common stock Issuance = $2,000

January 12:    (1,100) Treasury stock purchase = $1,100

January 29 16,900 = shares outstanding

Dividends per share = $0.20

Dividend Payable = $3,380 ($0.20 x 16,900)

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