Answer:
The entry would be as under:
Dr Cash Dividends $120,000
Cr Dividends Payable $120,000
Explanation:
The company announced the dividend of $120,000 ($1.5 * 80,000 shares). This means that the company will have to pay its dividend which it has announced. Hence the liability has arisen which means the entry at the announcement date would be:
Dr Dividend $120,000
Cr Dividend Payable $120,000
When the dividend would be paid the entry would be:
Dr Dividend Payable $120,000
Cr Cash $120,000
Answer:
Answer is A. a debit to Cash Dividends for $120,000.
Refer below.
Explanation:
Aaron Company has 80,000 shares of $10 par common stock outstanding. On May 25, Aaron Company declared a $1.50 cash dividend. The market price of the stock on May 25 was $17 per share. The journal entry to record the cash dividend would include: a debit to Cash Dividends for $120,000.
