Chapter 6
Corporations: Contributed Capital and Dividends
295
Analysis
Suppose that Ned, the president of Flanders Inc., owns 990 of the outstanding preferred
shares and 6,000 of the common shares. What percentage ownership does Ned have?
AP-7B (
5
)
On February 1, 2016, Adam Enterprises declares a dividend of $4,800 to common shareholders
to be paid on February 4.
Required
a) Record the journal entry associated with this transaction. Assume the company uses the
cash dividends method to record dividends.
Date
Account Title and Explanation
Debit
Credit
b) Record the journal entry when Adam Enterprises pays out the dividend on February 4.
Date
Account Title and Explanation
Debit
Credit
