Question

On april 1, rawlings declares a dividend of $0.30 per share. rawlings has 100,000 shares authorized, and 40,000 issued and outstanding. the date of record is april 28, and the payment date is may 15.

which of the following entries is included in the journal entry on may 15?
multiple choice question.
A. debit dividends payable $12,000.
B. debit retained earnings $12,000.
C. credit cash $30,000.
D. credit common stock $30,000.

Answer 1

The correct journal entry on May 15 when Rawlings pays out dividends is a debit to dividends payable of $12,000 and a credit to cash of the same amount. Therefore, the correct entry for this date would be option A: debit dividends payable $12,000.

Step-by-step explanation:

On May 15, when Rawlings pays out the dividend declared on April 1 of $0.30 per share with 40,000 shares issued and outstanding, the journal entry would include a debit to dividends payable for $12,000 and a credit to cash for $12,000 to record the payment of the dividend. The calculation is 40,000 shares × $0.30 = $12,000. Therefore, the correct entry for this date would be option A: debit dividends payable $12,000.