10B

Gosling Corp. has 100,000 shares of common stock authorized, 80,000 shares issued, and 20,000 shares of treasury stock. Gosling declares a dividend of $0.10 share. Which of the following entries is required at the date of declaration?

Debit dividends $6,000. Reason: 60,000 shares outstanding x $0.10 (no cash is paid on date of declaration)

On April 1, 2021, 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?

Debit dividends payable $12,000. Reason: 40,000 x $.30 = $12,000

When a cash dividend is declared and paid in the same year, the total effects on the balance sheet include

Decrease stockholders' equity. Decrease assets.

When does a corporation record an increase in dividends payable?

On the declaration date

The journal entry to record the declaration of a dividend includes

a debit to Dividends a credit to Dividends payable

statement of stockholders' equity

a financial statement that shows changes in a corporation's ownership for a fiscal period

Assuming that two companies operating in the same industry are profitable, which of the following companies is more likely to pay dividends to its stockholders?

a mature company

Dividends ______ paid on treasury shares.

are not

When a corporation distributes assets of the company to its investors, it is referred to as a

dividend

payment date

dividends payable is decreased

What types of companies frequently do not pay dividends?

growth companies unprofitable companies

Dividends payable is a(n)______ account with a normal _______ balance and is recorded on the declaration date.

liability; credit

A credit balance in retained earnings indicates that

net income has exceeded the dividends distributed to shareholders.

An accumulated deficit in retained earnings indicates that the company has

net losses.

the following shares are eligible to receive dividends

outstanding shares

Albert Inc. has both common and preferred stock outstanding. Which should be listed first in the stockholders' equity section of the balance sheet?

preferred stock

the following is typically presented first in the equity section of the balance sheet

preferred stock

The date on which a company determines the registered owners of the stock who will receive a dividend is referred to as the

record date.

The purpose of the statement of shareholders' equity is to

report the changes and the sources of the changes in shareholder equity accounts.

A company's past profits that are not paid out in dividends are

retained earnings

A corporation's accumulated, undistributed net income or loss is referred as

retained earnings

Earned capital increases

retained earnings

earned capital

retained earnings

Diva, Inc. declared and paid $10,000 of dividends in Year 3. The dividends result in a reduction of

retained earnings.

Retained earnings are:

sometimes called earned capital. all of the company's earnings not distributed to stockholders. increased by net income. decreased by dividends.

A debit balance in retained earnings indicates that

the company has an accumulated deficit.

Retained earnings of $100,000 represent a corporation's cumulative earnings______ and is shown on the ______.

not paid out by dividends; balance sheet and statement of retained earnings

True or false: Typically the balance in the additional paid-in capital account will be larger than the common stock account of a company that issues par value stock.

true

The dividend payment date is when:

cash is decreased dividends payable is decreased

Invested Capital

common stock

Dividends payable is recorded as a credit on the

declaration date

The date on which a cash dividend becomes a liability to a corporation is the

declaration date.

The declaration and payment of a cash dividend ultimately causes a(n):

decrease in stockholders' equity. decrease in Cash. decrease in Retained earnings.

The following will change the balance of a stockholders' equity account category

Cash dividends Preferred stock is issued Treasury stock is resold at cost

dividend

A distribution of a company's accumulated prior earnings is a(n) ______.

Balance Sheet

A financial statement that reports assets, liabilities, and owner's equity on a specific date.

the following occurs on the date of record

A list of shareholders that are entitled to receive a dividend is made.

the following accounts are classified as shareholders' equity

Additional paid-in capital Retained earnings Common stock

retained earnings

An amount earned by a corporation and not yet distributed to stockholders.

How should cash dividends be reported on the statement of shareholders' equity?

As a reduction of retained earnings.

On March 1, 2021, Fresh Corp. declared a dividend of $3,000. The record date is March 20, 2021, and the payment date is April 1, 2021. The journal entry required on April 1, 2021, will include which of the following entries?

Debit dividends payable $3,000. Credit cash $3,000

Which financial statement summarizes the changes in the balance of each equity over time?

Statement of stockholders' equity only

When does a dividend become a liability to a corporation?

When it is declared by the board of directors

The effect on the accounting equation of declaring a dividend that will be paid at a later date includes a(n):

increase in liabilities. decrease in stockholders' equity.

An accumulated deficit

indicates accumulated net losses means that Retained earnings has a debit balance