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View Full Version : Dividends Declared - Please verify my answer or correct me


Jazzy2010
Mar 23, 2010, 02:37 PM
Transaction: The board of directors declared a $2.70 per-share cash dividend payable on January 14 to stockholders of record on December 26th.


I have 10,000 shares authorized of common stock, no par, with a stated value of $30 per share.
My general ledger Common Stock account has a credit balance of $189,000 (6300 shares x $30). My general ledger Treasury Stock account has a balance of $44,610 (1,000 shares) and I recently repurchased another 700 shares totaling 1,700 shares. Based on this I would assume I have 4,600 shares outstanding.

I thought I would have to debit Retained Earnings since I am declaring $12,420 (4600 shares x $2.70) and I would need to credit Dividend Payable.

Should I not debit retained earnings?
Does my calculation for outstanding shares sound right to you?

Thanks again for your help.

I do have a Dividends Declared - Cash Account available in my project.

rehmanvohra
Mar 24, 2010, 06:14 AM
The entry is correct that debits dividends and credit dividends payable. The dividends account is closed to retained earnings