Weaver Corporation had the following stock issued and outstanding at January 1, Year 1: 112,000 shares of $4 par common stock. 4,500 shares of $110 par, 7 percent, noncumulative preferred stock. On June 10, Weaver Corporation declared the annual cash dividend on its 4,500 shares of preferred stock and a $3 per share dividend for the common shareholders. The dividends will be paid on July 1 to the shareholders of record on June 20. Required a. Determine the total amount of dividends to be paid to the preferred shareholders and common shareholders.b. Prepare general journal entries to record the declaration and payment of the cash dividends.

Explanation:

a. Dividend on Common Stocks   $3*112,000=$336,000

   Dividend on preference stocks 4,500*110*7%=$34,650

b. when dividend is declared, liability will be accrued as follows;

    Retained Earnings-Common Stocks            Dr.$336,000

     Retained Earnings-Preferred Stock              Dr.$34,650

    Dividend Payable                                          Cr.$370,650

When divided is paid;

Dividend Payable    Dr.$370,650

Bank                        Cr.$370,650

a . Dividend on preferred stock = $34,650

Dividend on common stocks

= $336,000

b.

Explanation:

Given

1 year stock = 112,00 per shares

Year stock = 4,500 per share

Common stock = $4

Preferred stock = $110

rate = 7%

Que

a.

Dividend on preferred stocks = 4,500 × 110× 7%

Dividend on preferred stock = $34,650

Dividend on Common Stocks $3*112,000=

Dividend on common stocks

= $336,000

b. Dividend Payable = Dr.$370,650

Liability accrued when dividend is declared is

Retained Earnings Common Stocks Dr. = $336,000

Retained Earnings-Preferred Stock Dr. = $34,650

Dividend Payable = Cr.$370,650

When divided is paid;

Dividend Payable = Dr.$370,650

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