heducationcomllowconnecthtm 6 E1111 Recording Dividends and

heducation.com/llow/connecthtm 6 E11-11 Recording Dividends and Preparing a Statement of Retained Earnings [LO 11-2, LO 11-3 The annual report for Sneer Corporation disclosed that the company declared and paid preferred dividends in the amount of $200.000 in the current year It also declared and paid dividends on common stock in the amount of $300 per share. During the current year, Sneer had 1 million common shares authorized, 400000 shares hed been issued, and 190,000 shares were in treasury stock The opening balance in Retained Eamings was $900.000 and Net Income for the current year wes $400000 Required: 1. Prepare journal entries to record the declaration, and payment, of dividends on (o) preferred and (b) common stock 2. Using the information given above, prepare a statement of retained earnings for the year ended December 31 3. Prepare a journal entry to close the dividends account Complete this by entering your answers in the tabs below. Prepare journal entries to record the declaration, and payment, of dividends on (a) preferred and (b) common stock. (af no entry is required for a transaction/event, select \"No Journal Entry Required\" in the first account field.) 1 Record the declaration of a cash dividend of $200,000 to the preferred stockholders Record the payment of the cash dividend to the preferred Record the declaration of a cash dividend of $3.00 per share to the common stockholders payable on the shares Record the payment of the cash dividend to the common

Solution

Dividend on common shares stocks issued 400,000 less:Treasury stock 190,000 stocks outstanding 210,000 Dividend           = 210,000shares *$3 per share 630000 answer TR Accounting titles & explanations debit Credit 1) Cash dividend 200,000 Dividends payable-preferred stock 200,000 2) Dividends payable-preferred stock 200,000 cash 200,000 3) Cash dividend 630,000 Dividends payable-common stock 630,000 4) Dividends payable-common stock 630,000 cash 630,000 Requirement 2 Statement of retained earnings Retained earnings,January 1 900,000 Add net income 400,000 less dividend to preferred stocl 200,000 less dividend to common stock 630,000 Retained earnings,december 31 470,000 Requirement 3 TR General journal Debit Credit 1) Retained earnings 200,000 Cash dividend-preferred stock 200,000 2) Retained earnings 630,000 cash dividend - common stock 630,000