Hello,

Please help me to understand how to journal entry this accounting problem.

March 5: Declared a $.40 per share cash dividend to be paid on April 6th to stockholders of record on March 20th.

Contributed Capital for Common Stock was given as $2/par value, 6,000,000 shares authorized, 1,000,000 shares issued and outstanding.




Thank you!

First you have to figure out how much the cash dividends will be. Take $0.40 per share cash dividend times the number of shares issued and outstanding on March 20.

So $0.40 * 1,000,000 = total amount of cash dividends.

Now your journal entry will be:
Debit Retained Earnings for the amount calculated above
Credit Dividends Payable for the amount calculated above