declared a So 50 per share cash dividend on its common share

declared a So 50 per share cash dividend on its common shares. The company has 43,000 shares authorized, 22.800 31 shares issued, and 17,200 shares of common stock outstanding The journal entry to record the dividend declaration is poins 2 Debit Reained Eanings $8.600 credit Common Dividends Peyable $8,600 Debit Common Dividends Payable $8.600, credt Cash $8.600 Dest Retained ning $1400. cest Common Diviens Peyabie 5$1400

Solution

Debit Retained Earnings $8,600;

Credit Common Dividends Payable $8,600.

Note; -

Dividend = $0.50 * outstanding shares at end

   = $0.50 * 17200 shares

   = $8,600

Debited to \"Retained Earning\" because dividend will be paid out of Retained Earnings (Credit balance), after declaring dividend, it will reduce the Retained Earning balance to Debit balance.

Common Dividend payable is credited because it is a liability for the company to pay it.