[Spartain 08]

Precision Tools Limited is a company incorporation with 220 000 common shares outstanding. On March 1, 20- the board of directors of the company declared a dividend of 25 cents to be paid on March to shareholders of record on March 15.

:confused: I don't Understand the question :confused:

Answer the following questions:

1. Calculate the total dividend to be paid.
2. Journalize the accounting entry to record the deceleration of the dividend
3. Journalize the accounting entry to record the payment of above dividend

Accounting 1 sixth edition Syme Ireland - Chapter 13 Busniess Organization and Making Desitions

[terryg752]

I am not sure but I think it will be like this:

1. Obviously, dividend per share is 25 cents per share. So multiply by no. of shares to get your answer. ($55000)

2. Credit a LIABILITY account "Dividends payable" (or whatever you want to call it)

Debit "Dividend Declared" (AN EXPENSE ACCOUNT)


3. Debit (Liability Account) "Dividends payable"

Credit "Cash" (or whatever you call it), an Asset Account