Recording federal income tax transactions and cash dividend transactions. Selected transactions of Divad Corporation during 2013 follow. Record them in the general journal. Analyze: What annual per share dividend was paid to common stockholders in 2013?
Mar. 15 Filed the federal income tax return for 2012. the total tax for the year was $125,250. During 2012, quarterly deposits of estimated tax totaling $120,000 had been made. The additional tax of $5,250 was paid with the return. On December 31, 2012, the accountant had estimated the total tax for 2012 to be $123,600 and had recorded a liability of $3,600 for federal income tax payable.
Apr. 15 Paid first quarterly installment of $32,000 on 2013 estimated federal income tax.
May 3 Declared dividend of $0.25 per share on the 40,000 shares of common stock outstanding. The dividend is payable on June 2 to stockholders of record as of May 20,2013.
June 2 Paid dividend declared on may 3.
June 15 Paid second quarterly installment of $32,000 on 2013 estimated federal income tax.
Sept. 15 Paid third quarterly installment of $ 32,000 on 2013 estimated federal income tax.
Nov. 2 Declared dividend of $0.25 per share on 40,000 shares of common stock outstanding. The dividend is payable on December 2 to holders of record on November 20.
Dec. 2 Paid dividend declared on November 2.
Dec. 15 Paid fourth quarterly installment of $32,000 on 2013 estimated income tax.
Dec. 31 total income tax for 2013 was $128,940. Record as an adjustment the difference between this amount and the total quarterly deposits.
To find out the annual per share dividend paid to common stockholders in 2013, we need to analyze the dividend transactions provided.
1. Start by recording the dividend declarations and payments in the general journal:
- May 3: Declare dividend ($0.25 per share) on 40,000 shares of common stock outstanding.
Debit: Retained Earnings ($0.25 x 40,000)
Credit: Dividends Payable ($0.25 x 40,000)
- June 2: Pay dividend declared on May 3.
Debit: Dividends Payable
Credit: Cash
- Nov. 2: Declare dividend ($0.25 per share) on 40,000 shares of common stock outstanding.
Debit: Retained Earnings ($0.25 x 40,000)
Credit: Dividends Payable ($0.25 x 40,000)
- Dec. 2: Pay dividend declared on Nov. 2.
Debit: Dividends Payable
Credit: Cash
2. Calculate the total dividends paid during 2013:
- May dividend payment: $0.25 x 40,000 shares = $10,000
- June dividend payment: $0.25 x 40,000 shares = $10,000
- Nov. dividend payment: $0.25 x 40,000 shares = $10,000
- Dec. dividend payment: $0.25 x 40,000 shares = $10,000
3. Add up the total dividends paid in 2013:
$10,000 + $10,000 + $10,000 + $10,000 = $40,000
4. Determine the number of outstanding shares:
The question states that there are 40,000 shares of common stock outstanding.
5. Calculate the annual per share dividend:
Divide the total dividends paid ($40,000) by the number of outstanding shares (40,000).
$40,000 / 40,000 shares = $1 per share
Therefore, the annual per share dividend paid to common stockholders in 2013 was $1 per share.