Reference no: EM132493584
Analyzing and Identifying Financial Statement Effects of Dividends
Chaney Company has outstanding 25,000 shares of $10 par value common stock. It also has $405,000 of retained earnings. Near the current year-end, the company declares and pays a cash dividend of $1.90 per share and declares and issues a 4% stock dividend. The market price of the stock at the declaration date is $35 per share.
Question a. Using the financial statement effects template, illustrate the effects of these two separate dividends.
Use negative signs with answers when appropriate. When applicable, enter total amount for contributed capital.
Balance SheetIncome StatementTransactionCash Asset+Noncash
Asset=Liabilities+Contrib.
Capital+Earned
Capital-Contra
Question b. Prepare the journal entries for these two separate dividend transactions.
Question c. Post the journal entries from b to the related T-accounts.