Bowie Company has 100,000 shares of common stock outstanding. On April 15, the board declared a $.30 dividend to be paid to stockholders of record on May 4. The dividend was distributed on May 15. The proper journal entry for Bowie Company on May 15 does includes what?
Cash Dividends is a type of dividend given by a corporation to its shareholders to serve as a financial incentive. Moreover, it is important that a corporation's retained earnings can cover any cash dividends declaration because the retained earnings account will be charged for such transaction.
Answer and Explanation:
|Date||Account Name & Explanation||Debit||Credit|
|May 04||Retained Earnings||$30,000|
|Cash Dividends Payable||$30,000|
|To record the declaration of cash dividends|
|May 15||Cash Dividends Payable||30,000|
|To record the payout of cash dividends|
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from Finance 101: Principles of FinanceChapter 16 / Lesson 1