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On April 15 of this year, the board of directors for Jedi Company declared a cash dividend of 65 cents per share payable to stockholders of record on May 20. The dividends will be paid on June 14. The company has 100,000 shares of stock outstanding.
Required:
Prepare any necessary journal entries for each date:
a) Record the appropriate journal entry on April 15 related to the cash dividend.
b) Record the appropriate journal entry on May 20 related to the cash dividend.
c) Record the appropriate journal entry on June 14 related to the cash dividend.

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Answer:

April 15

Dividends $65,000 (debit)

Shareholders for Dividends $65,000 (credit)

Being Dividends proposed to Shareholders

May 20

No Entry

June 14

Shareholders for Dividends $65,000 (debit)

Cash $65,000 (credit)

Being payment of dividends to outstanding shareholders

Explanation:

Journal entries and narrations are provided above.

Dividend Calculation = 100,000 shares × 65 cents

                                   = $65,000

Note : On 20 May no entry must be made. On this day the directors determine the number of stocks outstanding for dividends.

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