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Fetzer Company declared a $0
Fetzer Company declared a $0.55 per share cash dividend. The company has 200,000 shares authorized, 190,000 shares issued, and 8,000 shares in treasury stock. The journal entry to record the payment of the dividend is:
-
- Debit Retained Earnings, $104,500; credit Cash, $104,500.
- Debit Retained Earnings, $100,100; credit Cash, $100,100.
- Debit Dividends Payable, $104,500; credit Cash, $104,500.
- Debit Dividends Payable $100,100; credit Cash $100,100.
Expert Solution
Answer:
d .
Step-by-Step explanation
Retained earnings ...Dr $100100 (190000-8000)*0.55
To Dividend Payable $100100
(Being dividend declared recorded)
Dividend Payable ...Dr $100100
To cash $100100
( Being dividend payment recorded)
Treasury stock consist of shared issued but not outstanding. Dividend is paid on shares issued and outstanding. Hence, treasury stock are excluded while recording dividend payment.
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