Question

On March 15, American Eagle declares a quarterly cash dividend of $0.125 per share payable on April 13 to all stockholders of record on March 30.

Required: Record American Eagle s declaration and payment of cash dividends for its 220 million shares.

Answer 1

1. March 15(Declaration Date)

Dr Dividends 27,500,000

Cr Dividends Payable 27,500,000

2.April 13(Payment Date)

Dr Dividends Payable 27,500,000

Cr Cash 27,500,000

Step-by-step explanation:

Preparation of Journal entries

1. Preparation of the journal entry to Record American Eagle s declaration

March 15(Declaration Date)

Dr Dividends 27,500,000

(220 million shares x $0.125)

Cr Dividends Payable 27,500,000

2. Preparation of the journal entry to Record payment of cash dividends

April 13(Payment Date)

Dr Dividends Payable 27,500,000

(220million shares x $0.125)

Cr Cash 27,500,000