[hotboy20102008]

So I have a unadjusted trial balance with the following additionAL info and I have to make entries on them:

1- As at October 31st, 2009 there were 60 authorized and issued, non-cumulative preferred shares for $16,000. No dividends were declared for the preferred shares.

2- John Co. declared a dividend of $1,44 on September 30th, 2009 on its common shares, payable November 1st, 2009, to the common shareholders of record on October 15th, 2009.

3-Common shares: 50,000 shares of common shares were authorized, of which 20,000 shares were issued and are outstanding. The shares were issued for an average price of $3.00.

SO CAN SOMEONE HELP ME WITH THE ENTRIES I NEED TO MAKE WITH THESE 3... I WOULD REALLY APPRRECIATE IT! THANKS.

[hotboy20102008]

so here's what I was thinking but not sure...

DR. Dividends Declared 22800
CR. Cash 22800
(1.44*20,000= 22800)

[morgaine300]

Might want to check your math there.

You are making the entry as though you are paying it immediately. It's declared 9/30 and not paid until 11/1. Anything that is not yet paid is not credited out of cash, but credited to a payable, in this case Dividends Payable. You need to not make assumptions and "jump on" something like this so fast. Read carefully and pay attention to whether something is being paid or not.

[rehmanvohra]

1. What is the rate of dividend and par value of preferred shares? Preferred shareholders have the priority in payment of dividends over the ordinary/common stock. The company can not pass over the preferred dividends.

2. Does the company have sufficient retained profits to declare dividends?

However, the entries will be:
Preferred dividends -----$xxx
Common dividends -----$28,800
Dividends payable ------(28,800 + xxx)

Preferred and common dividends will be reported in the statement of changes in equity, and the payables will appear as a current liability