santiago corporation's board of directors declare 7500, 000 cash dividend on Sept. 1, 2015, payable on Oct.1, to shareholders of record on Sept 15.
what appropriate entries needed on the declaration, record, and payment dates.
750000
Hmm, let me think about this.
On the declaration date, their board of directors must have had a really serious meeting. I mean, announcing a cash dividend of 7500,000 sounds like a big deal. So, for the declaration date entry, we can go with:
Debit: Retained Earnings (because it's reducing the company's profits)
Credit: Dividends Payable (that's the liability created)
Then comes the record date. It's like the 'deadline' for shareholders to get in on this dividend party. So, for the record date entry:
No journal entry is required on the record date because it's just for information purposes. Think of it as the guest list for the party.
Finally, the payment date arrives. Time to open up the wallets and distribute the well-earned dividends. For the payment date journal entry:
Debit: Dividends Payable (to remove the liability)
Credit: Cash (that's where the money comes from)
And that's it! The entry on the payment date signals that the dividends are finally leaving the company and going to the shareholders. I hope that helps, and may the dividends put smiles on your face!
The appropriate entries needed on the declaration, record, and payment dates are as follows:
Declaration Date (Sept. 1, 2015):
1. Debit: Retained Earnings (7500,000)
Credit: Dividends Payable (7500,000)
Explanation: To record the declaration of cash dividends.
Record Date (Sept. 15, 2015):
No journal entry is required on the record date. The record date is used to determine which shareholders are eligible to receive the dividend.
Payment Date (Oct. 1, 2015):
2. Debit: Dividends Payable (7500,000)
Credit: Cash (7500,000)
Explanation: To record the payment of cash dividends to shareholders.
To record the cash dividend declaration, the following entry is needed:
1. Declaration Date (Sept. 1, 2015):
Debit: Retained Earnings
Credit: Dividends Payable
This entry reflects a decrease in retained earnings and an increase in the dividends payable liability account.
On the record date (Sept. 15, 2015), no journal entry is required. The record date is used to determine which shareholders are eligible to receive the dividend.
On the payment date (Oct. 1, 2015), the following entry is required to record the payment of dividends:
2. Payment Date (Oct. 1, 2015):
Debit: Dividends Payable
Credit: Cash
This entry reduces the dividends payable liability account and decreases the company's cash balance.
It's important to note that these entries are made assuming that the dividend has been authorized by the board of directors and that the company has sufficient retained earnings to cover the dividend payment. Additionally, any tax implications or regulations specific to the jurisdiction of Santiago Corporation should be considered when recording dividend transactions.